Blackstone Inc. (NYSE:BX) just posted one of its stronger quarters in years. Profit available to shareholders jumped 26% to $1.52 a share, beating estimates that were clustered around $1.33 to $1.35. Total assets under management grew 11% to $1.35 trillion, and revenue jumped 36% to $5.04 billion. Nine of the firm’s ten best-performing investments right now are tied to artificial intelligence. Yet Blackstone’s stock is down about 20% so far this year as of July 23, roughly in line with its peers.
Why the Beat Didn’t Move the Stock
Part of the answer is that not every number was strong. Base management fees, one of the metrics analysts watch most closely, came in lighter than expected. The private credit business, which lends money to companies rather than owning them outright, had its second straight quarter of falling profit, down 6% to $373 million. That business also saw its flagship retail fund pull in just $1 billion from wealthy individual investors this quarter, down sharply from $1.9 billion last quarter and $3.7 billion a year ago, as some retail investors grew nervous about private credit generally and pulled money out. President Jon Gray of Blackstone said withdrawal requests have “slowed materially” so far in the current quarter, which is a positive sign, but the pullback itself was real.
This makes you wonder: Is Blackstone Inc. (NYSE: BX)’s AI-driven growth fast enough to keep the whole firm doing well even when other parts are struggling, or is the market right to be cautious?
The Bull Case
Blackstone’s AI bet goes back to 2021, when it took data center operator QTS private for $10 billion. This quarter, it struck new deals tied to Google’s AI chips, Broadcom chip financing, and Anthropic compute, and sold a data center portfolio for $8 billion and a battery storage company for $7 billion. Infrastructure financing is a real fee engine now too, a record $321 million in transaction fees this quarter, nearly double last year. Gray argues Blackstone Inc. (NYSE:BX) deserves a higher valuation than it gets: almost no debt, a dividend yield near 4%, and tech-like growth at a discount to tech multiples. Data center leasing has scaled from 1 gigawatt in 2024 to 2 in 2025 to a pace of at least 7 this year, built on signed contracts with creditworthy clients rather than speculative building. The firm is also expanding abroad, joining a $16 billion Kuwait pipeline deal and planning a new Dubai office.
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The Bear Case
The AI story has real cracks. This month, QTS, the same firm that started this strategy in 2021, canceled a planned Virginia data center after local opposition, even with county approval already in hand. A June Reuters/Ipsos poll found only 14% of Americans would support a data center in their own community. CEO Schwarzman himself flagged the risk of “excessive exuberance” in AI investing. Away from AI, software and professional-services businesses in Blackstone Inc. (NYSE:BX)’s portfolio are seeing lower valuations and less deal activity, the opposite of the AI infrastructure side. Private credit still isn’t fully stabilized, wealthy individuals make up nearly a quarter of what Blackstone manages, and their pullback from that business shows retail sentiment can shift fast.
Insider Monkey’s Hedge Fund Data
Insider Monkey’s hedge fund database shows a steady but shrinking bet. 84 hedge funds held Blackstone Inc. (NYSE:BX) at the end of Q1 2026, unchanged from the quarter before, but the dollar value they held fell 18%, from $2.47 billion to $2.02 billion. That pattern, the same number of funds holding smaller positions, lines up with a stock that’s been sliding all year even as the underlying business kept growing. Blockstone’s closest comparables are Blackrock Inc. (BLK), KKR & Co. (KKR) and Brookfield Corporation (BN). Blackrock (BLK) was preferred by 79 hedge funds, KKR was preferred by 82 hedge funds, and BN was favored by 47 hedge funds. Overall, Blackstone is more liked by hedge funds than BLK, KKR, and BN.
Conclusion
Blackstone Inc. (NYSE:BX)’s AI bet is real, it’s already showing up in fee income and deal flow, and the firm’s own executives argue the market hasn’t caught up to what the business is actually worth. However, the same quarter that proved the AI thesis also showed its limits: a canceled data center project, a private credit business still finding its footing, and a software and services side of the portfolio that isn’t participating in the AI boom at all. The stock’s 20% drop this year suggests investors are treating those problems as seriously as the AI wins, and until the private credit and community-opposition issues clear up, that skepticism probably isn’t going away just because one quarter beat estimates.
While we acknowledge the risk and potential of BX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BX and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
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