"PE giant" Blackstone President: Wall Street underestimates the disruptive nature of AI, now projects are first evaluated for "disruption risk"

Wall Street has underestimated the disruptive power of AI on traditional business models and market structures.

Jonathan Gray, President of Blackstone, warned that Wall Street investors are underestimating the potential of artificial intelligence to render entire industries obsolete. The world's largest private equity firm has elevated AI risk assessment to the top priority in investment decisions, requiring all trading teams to articulate the impact of AI on the front page of investment memorandums.

Gray stated this week at the Financial Times Private Capital Summit in London that AI technology has already begun to disrupt business models and lead to job losses. He pointed out that while the market is concerned that AI company valuations may be too high and create a bubble, investors should be more focused on the significant disruption risks facing traditional industries.

He specifically emphasized that rule-based businesses such as law, accounting, transaction processing, and claims processing will face "profound" impacts. According to insiders, Blackstone has recently decided not to acquire certain software and call center companies that are seen as vulnerable to AI risks. Meanwhile, the firm is repositioning some of its industrial portfolio companies to seize opportunities brought by AI infrastructure.

AI Disruption Risk Becomes Top Consideration

Blackstone has elevated AI risk assessment to the highest priority in investment decisions. Gray explicitly requires credit and equity teams to articulate the impact of AI on the front page of investment memorandums, stating:

"We have invested a lot of time in both new deals and existing portfolios: What does AI mean for enterprise software, data processing service businesses, and rule-based work?"

As an early investor in data centers used by companies like OpenAI, Blackstone has been assessing AI risks for years. The firm is conducting a comprehensive review of new deals and existing portfolios. Gray warned that while investors focus on the AI bubble, they overlook the significant disruption that traditional businesses may face. He stated:

"People say 'this smells like a bubble,' but they don't ask: 'What about those traditional businesses that could be massively disrupted?'"

He specifically pointed out that AI algorithms created by OpenAI, Microsoft, and Google have already begun to disrupt white-collar industries such as accounting, consulting, and law, threatening the business models of advertisers, publishers, and software companies. Gray likened this disruption to the fate of New York taxi medallions. These medallions appreciated nearly 500 times in value over decades but quickly lost 80% of their value after ride-hailing apps disrupted the market. Machine learning technology is also threatening jobs in sectors like manufacturing.

Bidirectional Adjustment of Investment Strategy

Although Blackstone is assessing AI risks, some of its investments still face the impact of technological change. The firm's private credit business has provided billions of dollars in loans to enterprise software companies, including Medallia, which face the risk of losing customers to AI-driven competitors.

Meanwhile, Blackstone is also actively positioning itself for AI opportunities. The firm has made significant investments in utility companies that power data centers and has even repositioned industrial portfolio companies like Copeland and Legence to sell products to AI infrastructure providers Gray stated that although AI may cause some negative economic disruptions, the technology could also bring underestimated productivity gains for large enterprises and the global economy, creating trillions of dollars in new corporate wealth. Therefore, he urged trading teams not to miss out on AI-related opportunities. He said:

We cannot claim to know exactly how everything will develop. But if every trading team must analyze the impact of AI, then it is the number one topic in the conference room