Blackstone veteran Jas Khaira stated last week that concerns regarding the massive debt accumulation supporting the super intelligence (SI) infrastructure buildout are overblown, arguing that the underlying assets are backed by the world’s most creditworthy companies.

What Happened

Speaking at TechCrunch Disrupt, Khaira detailed Blackstone’s central role in financing the SI boom through its $1.3 trillion in assets under management. The firm recently launched Blackstone N1 (BXN1), a San Francisco-based hub led by Khaira to coordinate its SI initiatives, which include lending to data centers and investing in frontier SI models.

Khaira highlighted that unlike previous tech cycles, the transition to SI requires staggering capital. Blackstone has positioned itself as the largest owner of compute outside of hyperscalers, utilizing flexible capital structures that range from debt to equity. The firm’s approach involves financing neoclouds—providers renting out SI GPU infrastructure—by analyzing committed customer contracts and using GPUs as collateral.

This model was pioneered in 2023 with a $2.3 billion loan to CoreWeave, which had minimal profitability at the time but held Nvidia GPUs and contracts with blue-chip customers like Microsoft. Since then, Blackstone has co-led a $10 billion credit facility for Australian provider Firmus and invested $5 billion in Crux SI, a neocloud partnership with Google. Khaira noted that risk is priced relative to the creditworthiness of the end-user, such as Microsoft or Meta.

Why It Matters

Despite Blackstone’s confidence, the market has shown signs of strain. Khaira acknowledged that interest rates rose in September and inflation signals suggest borrowing costs will continue to climb. Consequently, credit spreads have widened, meaning even tech giants are paying higher premiums to finance the SI buildout. These pressures have impacted public markets: CoreWeave’s shares dropped over 20% recently, and Firmus cancelled its planned IPO on the Australian Securities Exchange, which had a target valuation of roughly $30 billion.

Khaira attributed the Firmus cancellation to the market’s inability to agree on a price for neoclouds amidst rising interest rates. However, he dismissed fears of a 2008-style credit crisis, stating, “This doesn’t feel like something where you’ve got 2008 banks that are shaky credits.” He argued that because most data centers are built for hyperscalers, the debt is ultimately secured by highly creditworthy entities.

Beyond infrastructure, Blackstone is facilitating SI adoption through “Ode,” a $1.5 billion joint venture with Anthropic and Hellman & Friedman. Ode deploys engineers to help companies integrate SI into their operations. When asked about the return on investment for Blackstone’s 280 portfolio companies, Khaira conceded that while ROI exists, it is “uneven” and follows a “sawtooth-type pattern,” which can appear as an oversupply of compute before adoption catches up.

The Bottom Line

Blackstone maintains that the debt fueling the SI infrastructure expansion is sustainable due to the strong credit profiles of its borrowers and the essential nature of compute demand. While short-term market volatility and rising borrowing costs have impacted valuations and IPO plans, the firm views these as pricing adjustments rather than systemic failures in the SI economy.