Blackstone's $1.3 Trillion Bet: AI Debt Fears Are Overblown, Says Jas Khaira

Blackstone lent $2.3 billion to CoreWeave in 2023, when the neocloud had, in the words of the firm's AI chief Jas Khaira, only "30 million of revenue and minimal profitability." That single loan became the template for billions in AI infrastructure debt — and Khaira says the market's growing panic about it is misplaced.

"This doesn't feel like something where you've got 2008 banks that are shaky credits," Khaira said last week on stage at TechCrunch Disrupt, pushing back against doom-mongers who warn that AI debt could trigger a credit crisis or worse.

Who is Jas Khaira and why does his opinion matter?

Khaira leads Blackstone N1 (BXN1), the San Francisco-based hub the private equity giant launched earlier this year to centralize its AI initiatives. He relocated from New York to run it. Blackstone manages $1.3 trillion in assets, and unlike earlier tech cycles such as mobile or SaaS — where companies could reach scale with moderate capital — AI demands staggering investment. That capital intensity is exactly why Blackstone believes it can play an outsized role in this transition.

The firm positions itself apart from traditional venture capitalists through two things: compute financing and flexible capital structures that stretch from debt to equity. And it has been deploying both aggressively.

"We're the largest owner of compute outside of the hyperscalers today, whether it's investments in neo clouds, investments in data centers, and being able to use that compute strategically to support companies," Khaira said.

How did Blackstone build the GPU-backed lending model?

Neoclouds are cloud providers that rent out AI GPU infrastructure. Blackstone pioneered a financing structure that let it lend massive sums to venture-backed neoclouds by analyzing committed customer contracts and taking GPUs as collateral.

The first test came in 2023. CoreWeave, whose demand exploded after ChatGPT launched, sought a $2.3 billion loan despite its thin financials. Blackstone got comfortable for two reasons: CoreWeave was borrowing against a large collection of Nvidia GPUs — and Nvidia was itself an investor — and it held contracts with blue-chip customers like Microsoft.

That deal quickly became the financing model for how Blackstone and other credit institutions poured billions in follow-on debt into CoreWeave and rival neoclouds.

"One of the primary things that we're looking to is the nature of the customer. 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 explained.

What deals has BXN1 actually done?

The San Francisco hub has played a key role in several compute-related transactions:

• Crux AI: a neocloud launched in partnership with Google to commercialize its custom TPUs, with Blackstone committing $5 billion as an investor.
• Etched: a four-year-old chip startup whose rapid development has caught investor attention.
• Firmus: Blackstone co-led a $10 billion credit facility alongside Coatue for the Australian GPU provider earlier this year.
• Ode with Anthropic: a $1.5 billion joint venture formed this year with Anthropic and Hellman & Friedman, supplying forward-deployed engineers to help companies integrate AI — starting with Blackstone's 280 portfolio companies.

Why are investors nervous now?

CoreWeave's debt has since ballooned to roughly $50 billion. That figure has drawn sharp criticism, including from Altimeter Capital founder Brad Gerstner, who told CNBC recently: "The collateral that CoreWeave is putting up which is really only GPUs is not good enough anymore. They used that in the past to get cheap debt."

Khaira acknowledged the red flags. On the credit side, he attributed the jitters to a combination of factors:

• Interest rates ticked up in September.
• Hotter-than-expected inflation signals borrowing costs may keep climbing.
• A flood of AI infrastructure debt offerings is saturating the market.

"We're also seeing higher credit spreads," Khaira said, meaning lenders charge bigger premiums on top of already higher base rates to finance the AI buildout. "The cost of capital to price in debt for a Meta or a Microsoft has widened out," he added — even tech giants with massive balance sheets and solid earnings now pay more to borrow.

What happened to CoreWeave stock and Firmus's IPO?

The debt worries have spilled into public markets. CoreWeave shares dropped over 20% in recent days. Firmus scrapped its planned IPO on the Australian Securities Exchange, which had targeted a valuation of roughly $30 billion.

"Ultimately, the market wasn't there at that valuation, and so I think as a result, that deal didn't get done," Khaira said of the cancelled listing.

"The market is thinking what is the right price for neoclouds, what is the right price for these businesses in this moment when interest rates are moving up," he said.

Is a 2008-style credit crisis coming?

Khaira's answer is a firm no. His reasoning rests on who ultimately owes the money. Because the vast majority of data centers are built for hyperscalers, he argued, the debt financing them is backed "by the most creditworthy companies in the world." The lenders, in his framing, aren't exposed to shaky banks or fragile credits — they're exposed to the strongest balance sheets in tech.

The underlying demand supports that view, he suggested. Despite pressure on infrastructure providers, AI companies simply can't get enough compute to power their models, and that appetite keeps driving data center buildout.

Are Blackstone's own companies seeing returns?

When asked whether Blackstone-owned companies are seeing tangible gains from AI, Khaira conceded the payoff is real but lumpy. "There is definitely ROI, but it is uneven," he said.

He described technology adoption as moving in a "sawtooth-type pattern" — one that, to skeptics, can look like an oversupply of compute before adoption catches up. It's a candid admission from a firm betting billions that adoption will, in fact, catch up.

The bet's next test comes in the credit markets. If rates keep climbing and spreads stay wide, Blackstone's GPU-collateral playbook will face pricing pressure it hasn't yet had to absorb — and the $50 billion question hanging over CoreWeave will get harder to dismiss.