1 00:00:02,520 --> 00:00:08,760 Speaker 1: Bloomberg Audio Studios, podcasts, Radio news John This morning, Blackstone 2 00:00:08,760 --> 00:00:12,480 Speaker 1: posted a twenty five percent jump in distributable earnings and 3 00:00:12,520 --> 00:00:15,400 Speaker 1: a lot of this was due to retail activity flying 4 00:00:15,440 --> 00:00:18,680 Speaker 1: into Blackstone more and more. How far does this trend 5 00:00:18,760 --> 00:00:23,040 Speaker 1: go with more retail investors coming into private funds, especially 6 00:00:23,040 --> 00:00:24,600 Speaker 1: in the middle of all of this uncertainty. 7 00:00:26,320 --> 00:00:29,240 Speaker 2: Well, Shanale is always great to be with you. I 8 00:00:29,280 --> 00:00:32,280 Speaker 2: would just start with the quarter. It was tremendous for us. 9 00:00:33,040 --> 00:00:36,160 Speaker 2: First off, we delivered for our investors, that's the most 10 00:00:36,200 --> 00:00:40,440 Speaker 2: important thing. We had the most fund appreciation in nearly 11 00:00:40,560 --> 00:00:44,720 Speaker 2: four years. We delivered for shareholders, as you noted, with 12 00:00:44,800 --> 00:00:48,280 Speaker 2: strong growth and earnings per share. We also saw another 13 00:00:48,400 --> 00:00:52,440 Speaker 2: fifty two billion dollars of inflows. And what gets us 14 00:00:52,600 --> 00:00:56,600 Speaker 2: excited is we've got some cyclical tailwinds here in terms 15 00:00:56,600 --> 00:00:59,160 Speaker 2: of deal activity picking up as we look into the 16 00:00:59,200 --> 00:01:02,520 Speaker 2: new year, and then some of these secular growth trends 17 00:01:02,920 --> 00:01:06,880 Speaker 2: in infrastructure, in private credit and in private wealth, which 18 00:01:06,880 --> 00:01:10,480 Speaker 2: you noted, and I think that area still has a 19 00:01:10,640 --> 00:01:12,080 Speaker 2: lot of running room. 20 00:01:12,440 --> 00:01:13,440 Speaker 3: It's early days. 21 00:01:13,440 --> 00:01:17,160 Speaker 2: If you think about our institutional customers, they are about 22 00:01:17,200 --> 00:01:17,960 Speaker 2: a third. 23 00:01:18,280 --> 00:01:20,560 Speaker 3: Allocated two private assets. 24 00:01:20,800 --> 00:01:23,880 Speaker 2: And yet when we look at individual investors, they've got 25 00:01:23,920 --> 00:01:27,160 Speaker 2: just one two percent allocated to private so it's a 26 00:01:27,200 --> 00:01:29,800 Speaker 2: big world and we've done a very good job in 27 00:01:29,840 --> 00:01:33,160 Speaker 2: that area too. The performance of our products has been exceptional, 28 00:01:33,280 --> 00:01:37,920 Speaker 2: so the market potential are positioning our brand, the breadth 29 00:01:37,959 --> 00:01:40,959 Speaker 2: of what we do, the products we've offered to track record. 30 00:01:41,240 --> 00:01:44,040 Speaker 2: We think that sets up for a great outcome over time. 31 00:01:44,520 --> 00:01:47,960 Speaker 1: John, how much are you feeling certain and confident about 32 00:01:47,960 --> 00:01:50,240 Speaker 1: the second half of the year given that there are 33 00:01:50,400 --> 00:01:53,800 Speaker 1: still uncertainties around the administration's trade deals. 34 00:01:55,520 --> 00:01:56,560 Speaker 3: Well, it's interesting. 35 00:01:56,640 --> 00:02:00,120 Speaker 2: Ninety days ago we talked about this and we have 36 00:02:00,200 --> 00:02:04,240 Speaker 2: said consistently to sort of be a little bit patient, 37 00:02:04,400 --> 00:02:09,280 Speaker 2: let this tariff diplomacy settle. We have seen good progress 38 00:02:09,320 --> 00:02:12,200 Speaker 2: in terms of deals made with the UK and Japan 39 00:02:12,320 --> 00:02:15,080 Speaker 2: and Vietnam, and there's sort of a contour of what 40 00:02:15,200 --> 00:02:16,440 Speaker 2: these deals will look like. 41 00:02:16,880 --> 00:02:19,880 Speaker 3: It's obviously not a straight line. 42 00:02:19,919 --> 00:02:22,440 Speaker 2: We could have some more bumps here in early August, 43 00:02:22,840 --> 00:02:26,720 Speaker 2: but I think market participants, businesses are beginning to get 44 00:02:26,760 --> 00:02:30,120 Speaker 2: a sense that, you know, there will be resolution and 45 00:02:30,160 --> 00:02:34,120 Speaker 2: that six twelve months from now, tariffs and tariff diplomacy 46 00:02:34,160 --> 00:02:37,560 Speaker 2: will not be the main thing. And the US economy 47 00:02:37,600 --> 00:02:41,040 Speaker 2: has shown incredible resilience, and at the same time we 48 00:02:41,200 --> 00:02:46,480 Speaker 2: have this AI revolution coming towards us, huge investment around that, 49 00:02:47,080 --> 00:02:50,560 Speaker 2: and that and the productivity gains that should come give 50 00:02:50,680 --> 00:02:51,800 Speaker 2: us a lot of confidence. 51 00:02:52,080 --> 00:02:53,880 Speaker 3: It's never a straight line. 52 00:02:53,600 --> 00:02:55,560 Speaker 2: But there are a lot of good things when you 53 00:02:55,600 --> 00:02:58,600 Speaker 2: sort of look out over the horizon, particularly as we 54 00:02:58,680 --> 00:03:00,480 Speaker 2: get through some of these terriffics issues. 55 00:03:00,840 --> 00:03:03,160 Speaker 1: You mentioned deals a little bit earlier, but I want 56 00:03:03,160 --> 00:03:05,840 Speaker 1: to note that realizations for the second quarter were just 57 00:03:05,880 --> 00:03:08,880 Speaker 1: sixty three percent of what they were just four years ago. 58 00:03:09,360 --> 00:03:12,280 Speaker 1: The deal market industry wide has been slow to come 59 00:03:12,320 --> 00:03:16,480 Speaker 1: back in terms of private equity exits in particular, how 60 00:03:16,520 --> 00:03:18,400 Speaker 1: fast and heavy could it come back in the second 61 00:03:18,440 --> 00:03:21,600 Speaker 1: half of the year and when will they be materially 62 00:03:21,720 --> 00:03:25,800 Speaker 1: showing more IPOs and more M and A among portfolio 63 00:03:25,800 --> 00:03:27,320 Speaker 1: companies for Blackstone and others. 64 00:03:28,400 --> 00:03:30,320 Speaker 3: Well, Shanala, You're absolutely right. 65 00:03:30,360 --> 00:03:33,720 Speaker 2: It has been a tough three years for realizations. They've 66 00:03:33,720 --> 00:03:37,840 Speaker 2: been running down about two thirds m and A and 67 00:03:37,920 --> 00:03:43,160 Speaker 2: IPOs generally, that activity capital markets that ties to realizations 68 00:03:43,200 --> 00:03:46,360 Speaker 2: now for an extended period of time. But as we 69 00:03:46,400 --> 00:03:49,600 Speaker 2: look forward, we are seeing good signs. The equity markets 70 00:03:49,680 --> 00:03:53,000 Speaker 2: back at record highs. Debt spreads are back to pre 71 00:03:53,120 --> 00:03:57,320 Speaker 2: Liberation day levels, the economies hanging in there. We've got 72 00:03:57,320 --> 00:04:01,480 Speaker 2: a more favorable regulatory environment for in a and there's 73 00:04:01,520 --> 00:04:04,360 Speaker 2: a strong desire to do transactions. So when we look 74 00:04:04,520 --> 00:04:09,080 Speaker 2: at our portfolio, we see an IPO pipeline. That's the 75 00:04:09,120 --> 00:04:13,080 Speaker 2: biggest since it's been in twenty twenty one. We did 76 00:04:13,080 --> 00:04:16,160 Speaker 2: an IPO in Europe a couple of weeks ago our first. 77 00:04:15,800 --> 00:04:16,799 Speaker 3: And many years. 78 00:04:17,520 --> 00:04:20,280 Speaker 2: When we look in our dead area, the number of 79 00:04:20,320 --> 00:04:23,720 Speaker 2: new credits we're screening is up fifty percent from year end. 80 00:04:24,120 --> 00:04:26,800 Speaker 2: All of that is positive, but I would caution that 81 00:04:26,880 --> 00:04:30,039 Speaker 2: it takes a bit of time. So getting an IPO done, 82 00:04:30,120 --> 00:04:33,440 Speaker 2: of bringing a company out for sale, that activity is 83 00:04:33,480 --> 00:04:34,600 Speaker 2: definitely going to pick up. 84 00:04:34,640 --> 00:04:36,360 Speaker 3: As we move towards the end of the year. 85 00:04:36,760 --> 00:04:40,159 Speaker 2: You're going to see exit activity, but that itself, it's 86 00:04:40,240 --> 00:04:42,040 Speaker 2: like bringing plane out to the runway. 87 00:04:42,240 --> 00:04:43,760 Speaker 3: We'll take a bit of time, but the. 88 00:04:43,680 --> 00:04:47,280 Speaker 2: Path of travel here looks good, and I do think 89 00:04:47,400 --> 00:04:51,080 Speaker 2: we'll see a step function increase in transaction activity in 90 00:04:51,080 --> 00:04:53,200 Speaker 2: the capital markets in the second half. 91 00:04:53,240 --> 00:04:56,120 Speaker 1: I realize you're probably hesitant to talk about particular deals, 92 00:04:56,120 --> 00:04:57,960 Speaker 1: but you are sitting on what was supposed to be 93 00:04:58,000 --> 00:05:01,520 Speaker 1: one of the year's biggest IPOs and others of Medline, 94 00:05:01,960 --> 00:05:03,880 Speaker 1: How long would it take to get a company like 95 00:05:03,920 --> 00:05:06,239 Speaker 1: that back to market? What would you need to see 96 00:05:06,600 --> 00:05:10,640 Speaker 1: before you had the ability to bring that to an IPO. 97 00:05:12,640 --> 00:05:15,279 Speaker 2: Well, we're never going to talk about specific companies, but 98 00:05:15,920 --> 00:05:19,320 Speaker 2: Medline is a terrific business, and we own a number 99 00:05:19,360 --> 00:05:23,919 Speaker 2: of other terrific businesses, and there are often considerations to 100 00:05:23,960 --> 00:05:29,000 Speaker 2: individual businesses in terms of operational things, transactions, other reasons 101 00:05:29,040 --> 00:05:30,320 Speaker 2: why you make decisions. 102 00:05:30,520 --> 00:05:33,320 Speaker 3: But it's also, as we've talked about, a function. 103 00:05:33,040 --> 00:05:37,400 Speaker 2: Of the market backdrop, and as the equity market stay healthy, 104 00:05:37,800 --> 00:05:40,520 Speaker 2: as the IPO market grows, it's a little bit of 105 00:05:40,520 --> 00:05:43,440 Speaker 2: a magnet pulling things in. So to me, on some 106 00:05:43,480 --> 00:05:46,640 Speaker 2: of these great companies we own, it's really a question 107 00:05:46,920 --> 00:05:49,560 Speaker 2: of when, not if, and when we think it's the 108 00:05:49,640 --> 00:05:53,080 Speaker 2: right time, we'll do it. Market conditions getting better is 109 00:05:53,120 --> 00:05:55,200 Speaker 2: obviously very helpful for our business. 110 00:05:55,320 --> 00:05:57,159 Speaker 1: Now, I want to read you a quote from Oppenheimer 111 00:05:57,200 --> 00:05:59,640 Speaker 1: off the heels of your results this morning. They said 112 00:05:59,640 --> 00:06:02,440 Speaker 1: blacks Zone is deploying more in real estate than it 113 00:06:02,480 --> 00:06:06,080 Speaker 1: is realizing, indicating some bullishness on its part as it 114 00:06:06,120 --> 00:06:08,600 Speaker 1: puts more money to work than it's taking off the table. 115 00:06:09,080 --> 00:06:11,400 Speaker 1: Do you agree with that categorization? Can you give any 116 00:06:11,400 --> 00:06:13,080 Speaker 1: color around how bullish you might be? 117 00:06:14,839 --> 00:06:17,080 Speaker 3: I would agree with that characterization. 118 00:06:17,440 --> 00:06:21,440 Speaker 2: I guess what I'd say is real estate has also 119 00:06:21,520 --> 00:06:23,920 Speaker 2: been through a tough patch here now for three and 120 00:06:24,000 --> 00:06:26,800 Speaker 2: a half years. It was a combination of COVID in 121 00:06:26,839 --> 00:06:30,320 Speaker 2: the office market and then just the rising cost of capital. 122 00:06:30,760 --> 00:06:34,359 Speaker 2: Interest rates went up a bunch, and so multiples came down. 123 00:06:34,520 --> 00:06:36,240 Speaker 3: In real estate, cap rates went up. 124 00:06:36,760 --> 00:06:39,840 Speaker 2: But we're beginning to see some promising signs as we 125 00:06:39,880 --> 00:06:43,839 Speaker 2: look forward. We're seeing new supply come down pretty sharply, 126 00:06:44,279 --> 00:06:46,039 Speaker 2: and that takes a bit of time because of the 127 00:06:46,160 --> 00:06:50,440 Speaker 2: lag between construction going down and new deliveries. That's going 128 00:06:50,520 --> 00:06:52,680 Speaker 2: to start to show up in the fundamentals as we 129 00:06:52,720 --> 00:06:55,080 Speaker 2: head towards the end of the year into next and 130 00:06:55,200 --> 00:07:00,000 Speaker 2: cost of capitals coming down, borrowing costs, spreads, base rates. 131 00:06:59,800 --> 00:07:00,600 Speaker 3: That's helpful. 132 00:07:00,839 --> 00:07:04,599 Speaker 2: And we're seeing the early signs of transaction activity starting 133 00:07:04,640 --> 00:07:09,520 Speaker 2: to accelerate, particularly amongst smaller assets. The CMBs markets up 134 00:07:09,560 --> 00:07:12,640 Speaker 2: something like forty percent year to date, and so real 135 00:07:12,760 --> 00:07:17,720 Speaker 2: estate's a cyclical business. Apartment demand, logistic demand, These things 136 00:07:17,760 --> 00:07:20,720 Speaker 2: are not going away, but you have to work through 137 00:07:20,760 --> 00:07:21,480 Speaker 2: this cycle. 138 00:07:21,800 --> 00:07:22,880 Speaker 3: We're at that point. 139 00:07:22,880 --> 00:07:25,880 Speaker 2: We're getting closer, I think, to this tipping point where 140 00:07:25,920 --> 00:07:28,640 Speaker 2: the market sort of bottomed eighteen months ago. We talked 141 00:07:28,680 --> 00:07:31,080 Speaker 2: about that then, we said it wouldn't be a v 142 00:07:31,120 --> 00:07:31,880 Speaker 2: shape recovery. 143 00:07:31,920 --> 00:07:32,840 Speaker 3: That's what's happened. 144 00:07:33,040 --> 00:07:35,920 Speaker 2: But when we look out over the horizon, things certainly 145 00:07:35,960 --> 00:07:38,440 Speaker 2: look better for real estate, and of course, the way 146 00:07:38,480 --> 00:07:41,360 Speaker 2: we react to that is by trying to deploy capital 147 00:07:41,640 --> 00:07:43,040 Speaker 2: ahead of that recovery. 148 00:07:43,160 --> 00:07:46,280 Speaker 1: What you're speaking to is an easing of conditions before 149 00:07:46,320 --> 00:07:49,320 Speaker 1: we've even seen successive rate cuts this year from the 150 00:07:49,320 --> 00:07:52,040 Speaker 1: federal reserves. Obviously, the President has been very vocal for 151 00:07:52,120 --> 00:07:55,880 Speaker 1: his desire to see much more aggressive cuts than the 152 00:07:55,920 --> 00:07:59,960 Speaker 1: market is pricing in. Do you worry that cuts subsequent 153 00:08:00,160 --> 00:08:04,480 Speaker 1: cuts could spur another bout of inflation at this point. 154 00:08:05,680 --> 00:08:08,640 Speaker 2: Well, I think the Fed has done a very effective 155 00:08:08,800 --> 00:08:12,680 Speaker 2: job getting inflation down. They were a little late, as 156 00:08:12,680 --> 00:08:15,720 Speaker 2: we know, originally to raise rates, but then moved quickly. 157 00:08:16,280 --> 00:08:19,160 Speaker 3: And what we do is look at our proprietary data. 158 00:08:19,200 --> 00:08:21,960 Speaker 2: We have two hundred and fifty companies and thirteen thousand 159 00:08:22,000 --> 00:08:25,280 Speaker 2: pieces of real estate, and consistently for the last couple 160 00:08:25,320 --> 00:08:28,960 Speaker 2: of years. Others have been talking about sticky inflation. We've 161 00:08:29,040 --> 00:08:32,120 Speaker 2: just been looking at the proprietary data we have and 162 00:08:32,160 --> 00:08:36,440 Speaker 2: it continues to show inflation heading lower. Shelter costs, which 163 00:08:36,440 --> 00:08:39,840 Speaker 2: are the biggest component of CPI, are running well below 164 00:08:39,880 --> 00:08:43,040 Speaker 2: the government's three point eight percent, and so we think 165 00:08:43,080 --> 00:08:46,800 Speaker 2: that'll come down. Energy costs obviously coming down, and when 166 00:08:46,840 --> 00:08:50,360 Speaker 2: we survey our companies about the labor market, they're saying 167 00:08:50,400 --> 00:08:53,360 Speaker 2: it's the easiest to hire that it's been since COVID. 168 00:08:54,280 --> 00:08:58,480 Speaker 2: Wage growth is now down back around three percent. So 169 00:08:58,520 --> 00:09:00,160 Speaker 2: I think the Fed's going to have a lot of 170 00:09:00,200 --> 00:09:03,040 Speaker 2: good data. We could see an uptick in goods inflation 171 00:09:03,200 --> 00:09:06,960 Speaker 2: given what's happening in policy, but in aggregate I think 172 00:09:06,960 --> 00:09:10,520 Speaker 2: inflation continues to drift down. As a result, I think 173 00:09:10,559 --> 00:09:13,640 Speaker 2: the FED has the room to cut rates. So I 174 00:09:13,760 --> 00:09:17,400 Speaker 2: don't think given where inflation is, that's going to reignite 175 00:09:17,400 --> 00:09:21,720 Speaker 2: about of inflation, and so I think that will happen gradually. 176 00:09:22,160 --> 00:09:26,199 Speaker 2: Given the tariffs, given low unemployment, the FED is being patient, 177 00:09:26,480 --> 00:09:28,680 Speaker 2: but I think the facts will give them the room 178 00:09:28,679 --> 00:09:31,200 Speaker 2: to cut rates, and that again should be helpful to 179 00:09:31,240 --> 00:09:32,040 Speaker 2: the economy. 180 00:09:32,280 --> 00:09:33,960 Speaker 3: It should be helpful to markets. 181 00:09:34,160 --> 00:09:36,720 Speaker 1: With all the rhetoric, the push pull between the President 182 00:09:36,760 --> 00:09:39,120 Speaker 1: and the Federal Reserve that we've seen on and again, 183 00:09:39,200 --> 00:09:41,920 Speaker 1: off again threats to even let the FED chair go. 184 00:09:42,160 --> 00:09:44,800 Speaker 1: Do you worry about FED independence from where you're sitting. 185 00:09:46,360 --> 00:09:48,160 Speaker 2: Well, in the last couple of weeks, I think we've 186 00:09:48,160 --> 00:09:51,240 Speaker 2: heard from both the President and the Treasury Secretary that 187 00:09:51,280 --> 00:09:54,320 Speaker 2: they expect the FED chairman to continue to the end 188 00:09:54,360 --> 00:09:58,000 Speaker 2: of his term. I think the FED will continue to 189 00:09:58,040 --> 00:10:01,520 Speaker 2: be independent p and we'll have a choice to make 190 00:10:01,559 --> 00:10:05,679 Speaker 2: a replacement here. And I think this system has worked 191 00:10:05,720 --> 00:10:08,480 Speaker 2: well over time. I think it continue to work well. 192 00:10:08,559 --> 00:10:10,080 Speaker 2: There's a board of governors as. 193 00:10:09,960 --> 00:10:12,600 Speaker 3: Well, so I think the system works. 194 00:10:13,000 --> 00:10:19,000 Speaker 2: And ultimately there have been friction between the administration and 195 00:10:19,040 --> 00:10:21,880 Speaker 2: the Federal Reserve over time. This isn't the first time, 196 00:10:22,240 --> 00:10:24,400 Speaker 2: but I have a lot of confidence, just like I 197 00:10:24,480 --> 00:10:27,480 Speaker 2: do in the entire Madisonian system in the US, and 198 00:10:27,600 --> 00:10:30,160 Speaker 2: ultimately I think the FED will make the right calls 199 00:10:30,440 --> 00:10:31,400 Speaker 2: based on the data. 200 00:10:32,040 --> 00:10:34,360 Speaker 1: John, what do you think of this move that we're 201 00:10:34,360 --> 00:10:37,280 Speaker 1: seeing in terms of more CAPEX spending as well? I 202 00:10:37,280 --> 00:10:39,240 Speaker 1: want to shift gears and talk about data centers because 203 00:10:39,280 --> 00:10:42,520 Speaker 1: you did see Alphabet report overnight coming in with a 204 00:10:42,520 --> 00:10:46,160 Speaker 1: bigger CAPEX plan than what Wall Street was expecting. You 205 00:10:46,280 --> 00:10:49,120 Speaker 1: about a week ago were in Pennsylvania for a large 206 00:10:49,120 --> 00:10:52,560 Speaker 1: summit that the President himself attended, as well as, of 207 00:10:52,600 --> 00:10:55,600 Speaker 1: course Senator David McCormick, who has been pushing more investment 208 00:10:55,720 --> 00:11:01,120 Speaker 1: into the state. At what point does this become an 209 00:11:01,200 --> 00:11:05,199 Speaker 1: issue where investors stop rewarding CAPEC spending. You are already 210 00:11:05,200 --> 00:11:09,120 Speaker 1: seeing a little bit of weakness in Alphabet shares on 211 00:11:09,160 --> 00:11:12,160 Speaker 1: the heels of that announcement. Do you think that investors 212 00:11:12,200 --> 00:11:14,000 Speaker 1: are going to ask for question at some point? 213 00:11:15,960 --> 00:11:20,000 Speaker 2: Well, investors will ultimately look at the returns. 214 00:11:19,520 --> 00:11:20,960 Speaker 3: On the invested capital. 215 00:11:21,520 --> 00:11:25,400 Speaker 2: And the companies, the hyperscalers, the big tech companies are 216 00:11:25,440 --> 00:11:29,240 Speaker 2: spending an enormous amount, but it's because they believe that 217 00:11:29,320 --> 00:11:32,400 Speaker 2: there is a huge prize here at the end, and 218 00:11:32,559 --> 00:11:35,400 Speaker 2: to date their numbers have been really strong. 219 00:11:35,480 --> 00:11:38,040 Speaker 3: They continue to deliver real earnings growth. 220 00:11:38,800 --> 00:11:41,559 Speaker 2: I look through some of the Google summaries and what 221 00:11:41,679 --> 00:11:46,200 Speaker 2: was powerful is how much growth in agents in AI. 222 00:11:46,360 --> 00:11:50,280 Speaker 2: They're seeing uptick and usage as a result of AI. 223 00:11:50,640 --> 00:11:53,120 Speaker 2: And I think as long as these companies continue to 224 00:11:53,120 --> 00:11:56,080 Speaker 2: see their revenue and earnings grow, they're going to continue 225 00:11:56,120 --> 00:11:59,439 Speaker 2: to invest, and so I think this is a critically 226 00:11:59,440 --> 00:12:03,400 Speaker 2: important part of this AI revolution. Yes, we need these 227 00:12:03,480 --> 00:12:06,440 Speaker 2: large language models like a Gemini or an Open AI. 228 00:12:06,800 --> 00:12:09,760 Speaker 2: We need the chips that the videos of the world create. 229 00:12:10,160 --> 00:12:13,439 Speaker 2: But we need this physical infrastructure. We need the data 230 00:12:13,440 --> 00:12:16,000 Speaker 2: centers where we've been the biggest investor in the world. 231 00:12:16,280 --> 00:12:18,800 Speaker 2: We need the energy where we're also been a huge 232 00:12:18,840 --> 00:12:23,280 Speaker 2: investor in generation and transmission and utilities. Both of these 233 00:12:23,280 --> 00:12:26,880 Speaker 2: things in the physical world are hugely important. Ultimately, it's 234 00:12:26,880 --> 00:12:29,440 Speaker 2: going to be about the prize, but I think it's 235 00:12:29,440 --> 00:12:34,160 Speaker 2: pretty substantial. Bringing super intelligence at scale to the world 236 00:12:34,440 --> 00:12:37,760 Speaker 2: is going to lead to a huge shift in productivity, 237 00:12:38,160 --> 00:12:40,600 Speaker 2: and therefore I think the investment makes sense. 238 00:12:40,880 --> 00:12:41,080 Speaker 3: Now. 239 00:12:41,160 --> 00:12:44,240 Speaker 2: There will be, as often there is companies who lose 240 00:12:44,240 --> 00:12:47,880 Speaker 2: out investments that don't work out, But in aggregate, this 241 00:12:48,040 --> 00:12:52,800 Speaker 2: movement towards AI, the movement towards greater efficiency. What's going 242 00:12:52,840 --> 00:12:56,439 Speaker 2: to happen with autonomous vehicles with robots. I still think 243 00:12:56,520 --> 00:12:59,199 Speaker 2: we're in the early stage. And six months ago when 244 00:12:59,240 --> 00:13:01,920 Speaker 2: everyone was talking about deep seek and was the Capex 245 00:13:01,960 --> 00:13:04,840 Speaker 2: boom coming to an end, we were pretty consistent in 246 00:13:04,880 --> 00:13:07,840 Speaker 2: our view then that that wasn't the case. We continue 247 00:13:07,880 --> 00:13:09,480 Speaker 2: to feel that way today. 248 00:13:09,520 --> 00:13:13,120 Speaker 1: So, and I should clarify for Alphabet itself, the initial 249 00:13:13,160 --> 00:13:16,000 Speaker 1: reaction was negative. It later turned around, so clearly investors 250 00:13:16,000 --> 00:13:18,960 Speaker 1: still making up their minds on how to assess out 251 00:13:19,120 --> 00:13:21,920 Speaker 1: what all of the spending means. Last question for you, 252 00:13:22,000 --> 00:13:25,720 Speaker 1: is there something that investors are not seeing about the 253 00:13:25,920 --> 00:13:30,400 Speaker 1: move into data centers and more spending in AI that 254 00:13:30,920 --> 00:13:33,440 Speaker 1: you would point to would be the biggest payoff in 255 00:13:33,480 --> 00:13:35,360 Speaker 1: the next twelve to eighteen months. 256 00:13:37,559 --> 00:13:40,000 Speaker 2: You know, I think that in the physical world, it's 257 00:13:40,160 --> 00:13:42,800 Speaker 2: just the demand. You mentioned this conference we were at at 258 00:13:42,840 --> 00:13:46,280 Speaker 2: Pittsburgh that Dave McCormick hosted. It was a terrific event. 259 00:13:46,400 --> 00:13:49,640 Speaker 2: It was bipartisan in nature with Governor Shapiro there as well. 260 00:13:50,120 --> 00:13:53,320 Speaker 2: Just the amount of capital that's needed I think is 261 00:13:53,480 --> 00:13:59,600 Speaker 2: really really important. I think that investment spend will continue. 262 00:13:59,600 --> 00:14:02,720 Speaker 2: It a pay that is quite significant. And then I 263 00:14:02,760 --> 00:14:05,520 Speaker 2: think on the payoff side, it's what's going to happen 264 00:14:05,600 --> 00:14:10,280 Speaker 2: to make consumer lives better, make companies more efficient, the coding, 265 00:14:11,720 --> 00:14:14,440 Speaker 2: the customer engagement, the content creation. 266 00:14:15,200 --> 00:14:17,360 Speaker 3: I think that is really going to be. 267 00:14:17,400 --> 00:14:21,360 Speaker 2: Transformative to business to potential earnings. And again, as we 268 00:14:21,400 --> 00:14:25,000 Speaker 2: get through this tariff diplomacy. I think the world's going 269 00:14:25,080 --> 00:14:28,960 Speaker 2: to shift to focusing on AI and its impact and 270 00:14:29,000 --> 00:14:31,760 Speaker 2: the investment that needs to happen to make it a reality. 271 00:14:31,960 --> 00:14:34,880 Speaker 3: And I think for investors globally that's exciting. 272 00:14:35,360 --> 00:14:36,880 Speaker 1: John, thank you so very much. I know you have 273 00:14:36,880 --> 00:14:39,320 Speaker 1: a conference call to head off too. We appreciate your time. 274 00:14:39,320 --> 00:14:42,240 Speaker 1: Blackstone shares now up more than three point five percent 275 00:14:42,280 --> 00:14:43,840 Speaker 1: pre market after those results. 276 00:14:43,920 --> 00:14:44,520 Speaker 2: Appreciate it.