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BX Q3 Earnings Call Highlights AI Opportunities & Fee Growth

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Key Takeaways

  • BX expects double-digit base management fee growth in 2027 on new funds and expanding insurance ties.
  • Blackstone's AUM rose 10% to $1.37T, with $63.3B in inflows and record wealth assets of $330B.
  • BX aims to grow AI infrastructure amid real estate valuation pressure & elevated private credit redemptions.

Blackstone Inc. (BX - Free Report) emphasized expanding artificial intelligence infrastructure investments, resilient fundraising and improving earnings visibility during its third-quarter 2026 earnings call, despite higher interest rates and financial-market volatility.

Management expressed confidence in accelerating fee growth and investment realizations heading into 2027. However, real estate valuation pressures, private credit redemption activity and financing risks remained important areas of investor scrutiny.

BX Expects Stronger Fee Growth & Realizations

Vice chairman and CFO Michael Chae expects double-digit growth in base management fees during 2027, supported by new private equity funds, perpetual capital strategies and expanding insurance relationships.

Management anticipates a significant increase in fourth-quarter net realizations as previously announced asset sales close. Annual performance fee crystallizations should provide additional support.

Blackstone reported distributable earnings of $1.32 per share, beating the Zacks Consensus Estimate of $1.26. Total segment revenues of $3.22 billion surpassed the consensus estimate of $3.12 billion.

Blackstone Inc. Price, Consensus and EPS Surprise

Blackstone Inc. Price, Consensus and EPS Surprise

Blackstone Inc. price-consensus-eps-surprise-chart | Blackstone Inc. Quote

Blackstone Defends AI Infrastructure Investments

Chairman and CEO Stephen Schwarzman identified AI infrastructure and energy as major long-term investment opportunities despite growing concerns about financing costs and technology valuations.

During questioning from Morgan Stanley and Goldman Sachs analysts, president and COO Jonathan Gray emphasized the firm's focus on physical infrastructure, secured financing and long-term contractual arrangements.

Gray explained that Blackstone's data center investments generally involve 15- to 20-year contracts with creditworthy counterparties. Management acknowledged financing and technology risks but stressed disciplined capital deployment and limited speculative exposure.

BX Expands Fundraising Across Wealth & Insurance

Total assets under management increased 10% year over year to $1.37 trillion, supported by quarterly inflows of $63.3 billion.

Gray highlighted record private wealth AUM of $330 billion, up 15% year over year. Insurance AUM exceeded $300 billion, benefiting from growing demand for investment-grade private credit.

Responding to RBC Capital Markets, Gray attributed wealth fundraising momentum to investment performance, distribution relationships and new products. He cautioned that recently introduced multi-asset offerings will require time to gain broader adoption.

Blackstone Navigates Private Credit Redemption Pressures

BX's credit and insurance business attracted $35.8 billion in quarterly inflows, highlighting continued institutional demand.

However, Gray acknowledged that BCRED received repurchase requests representing 10% of net asset value, exceeding its 5% quarterly limit. The vehicle fulfilled approximately half of the requests, resulting in $1.4 billion in net outflows.

During questioning from Wells Fargo, management emphasized the scalability of insurance relationships. Gray highlighted demand for private investment-grade financing, while Chae indicated that insurance management fee rates generally average 40-50 basis points.

BX Faces Real Estate Valuation Headwinds

Higher interest rates weighed on Blackstone's opportunistic real estate funds, which depreciated 3.2% during the quarter. Core+ funds appreciated 1.6%.

Gray explained that higher capitalization rates pressured valuations, particularly in slower-growing property categories. Nevertheless, management highlighted stronger leasing demand across data centers and logistics.

Responding to Jefferies, Gray emphasized improving property fundamentals and reduced new supply. Chae separately indicated that real estate base management fees should remain broadly stable through year-end and into 2027.

Blackstone Maintains Focus on Long-Term Expansion

Blackstone deployed $30.1 billion during the quarter and reported $228.9 billion in available investment capital, maintaining substantial capacity for future transactions.

Management highlighted opportunities spanning energy infrastructure, private credit, secondaries and individual investor products while acknowledging continued market uncertainty.

Schwarzman and Gray emphasized disciplined investing, expanding distribution channels and recurring fee generation as central priorities. The firm's near-term focus remains on converting fundraising momentum and portfolio appreciation into sustainable earnings growth.

Zacks Rank & Style Scores Reflect Cautious Prospects

BX currently carries a Zacks Rank #4 (Sell), reflecting unfavorable earnings estimate revision trends. Its Growth Score of B indicates relatively attractive growth characteristics, while its Value Score of D and Momentum Score of F highlight weaker valuation and price-momentum positioning.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock's VGM Score of C reflects a moderate combined assessment across value, growth and momentum. The unfavorable Zacks Rank remains an important consideration despite the stronger Growth Score, as Style Scores complement rather than override the rank. The Zacks Rank may change as analysts revise earnings estimates following the latest results.

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