Private equity giant Blackstone is putting itself at the center of the AI boom, firm veteran Jas Khaira discussed last week on stage at TechCrunch Disrupt. It is writing checks via various strategies, ranging from offering massive loans to data centers to investing in frontier AI models and applications. Earlier this year, the firm launched Blackstone N1 (BXN1), a San Francisco-based central hub for its AI initiatives.
The group is led by Khaira, who relocated from New York to be at the epicenter of AI. Unlike earlier tech cycles such as mobile or SaaS, which allowed companies to reach significant scale with moderate capital, the transition to AI requires staggering amounts of investment. That need for capital is precisely why Blackstone, with its $1.3 trillion in assets under management, could play such a critical role in this tech shift.
Khaira emphasized that Blackstone sets itself apart from traditional venture capitalists through its focus on compute financing and its ability to offer flexible capital structures, ranging from debt to equity. And it has been investing aggressively. For instance, BXN1 played a key role in several compute-related deals, among them Crux AI, a neocloud launched in partnership with Google to commercialize its custom TPUs, to which Blackstone committed $5 billion as an investor.
It also backed four-year-old Etched, a chip startup whose rapid development has caught investor attention. Neoclouds are cloud providers that rent out AI GPU infrastructure. Blackstone pioneered a financing structure that allowed it to lend massive sums to venture-backed cloud neoclouds by analyzing both committed customer contracts and using GPUs pledged as collateral.
Blackstone’s first such deal came in 2023 with CoreWeave, shortly after that neocloud saw demand explode following the launch of ChatGPT. Despite having only “30 million of revenue and minimal profitability” at that time, according to Khaira, CoreWeave approached Blackstone for a $2.3 billion loan. CoreWeave was borrowing against the considerable value of its large collection of Nvidia GPUs, with Nvidia also an investor.
Blackstone also grew more comfortable with the loan because CoreWeave had contracts with blue-chip customers like Microsoft. That transaction quickly became the financing model for how Blackstone and other credit institutions provided billions in follow-on debt to CoreWeave and rival neoclouds. And if the customer is an investment-grade customer — let’s say it’s Microsoft or let’s say it’s Meta — the risk gets priced relative to that customer,” Khaira said.
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