Blackstone's Gray Says AI Boom Echoes 1870 Industrial Revolution, Warns on Valuations

Blackstone President and COO Jon Gray told more than 100 global investors on September 20 that AI's economic transformation resembles the 1870-1900 industrial revolution, with returns concentrated in chips, data centers and power rather than speculative applications. Gray cited proprietary data to argue the boom is producing real revenue. Blackstone's 14 AI portfolio companies grew annualized revenue 21-fold to $525 million from $25 million, while two model-company holdings rose in value to over $2.3 trillion combined from $683 billion. Hyperscaler capital spending doubled to $820 billion in 2026, equal to 2.5% of US GDP. Data center leasing is projected at 6 gigawatts this year, up from 2 gigawatts in 2025. He flagged power turbines, electrical equipment and chip capacity as bottlenecks, with General Electric Vernova turbine queues extending to 2031. Gray named cybersecurity, regulation, geopolitics and inflated valuations of pre-revenue startups as the top four risks, and said Blackstone is concentrating investment in computing infrastructure because "everything comes down to return."