Blackstone President Foresees ‘Profound’ AI Disruption in Business

The president of private capital group Blackstone says Wall Street is still underestimating artificial intelligence (AI).

In comments published Saturday (Oct. 18) by the Financial Times (FT), Jonathan Gray says investors are discounting the potential of AI to render whole industries obsolete, and said that understanding these risks has become key for Blackstone when considering investments.

“We’ve told our credit and equity teams: Address AI on the first pages of your investment memos,” said Gray at the FT’s Private Capital Summit in London earlier in the week.

As the FT noted, high valuations at loss-making AI startups and circular arrangements between many major players have triggered concerns about a bubble in the sector. Gray said that enthusiasm among investors meant that some misallocation of capital would be inescapable, comparing the situation to that of “Pets.com in 2000.”

However, he said the scale of the AI space means that investors might still underestimate its potential to demolish whole industries.

“People say, ‘This smells like a bubble,’” but they’re not asking: ‘What about legacy businesses that could be massively disrupted?’” said Gray. “If you think about rules-based businesses — legal, accounting, transaction and claims processing — this is going to be profound,” he added.

Gray’s comments follow those of Amazon founder Jeff Bezos earlier this month, when he contended that the AI boom is an “industrial bubble” and not a “financial bubble,” which means that even if the sector’s share prices implode, the technology’s benefits will stick around.

Speaking at Italian Tech Week, Bezos cited the fiber-optic cable that outlived the dot-com crash and the life-saving drugs that were still available in the wake of the 1990s biotech bust.

“Investors have a hard time in the middle of this excitement distinguishing between the good ideas and the bad ideas,” Bezos said. “That’s also probably happening today. But it doesn’t mean that anything that’s happening isn’t real. AI is real, it’s going to change every industry.”

Meanwhile, the PYMNTS Intelligence report “Workers Say Fears About GenAI Taking Their Jobs is Overblown” found a gulf between perceptions of generative AI’s effect on the job market and people’s perceptions of its threat to individual employment.

While most workers agreed that the technology presents a systemic threat of job displacement, indicating a wide-ranging belief in its disruptive potential, a smaller number said they were worried that their own jobs were in jeopardy.