BlackRock and Blackstone Execs Warn AI Investments Lack Clear Profitability Justification
At the Calcalist National Economic Conference, BlackRock Israel CEO Anat Levin and Blackstone Israel CEO Yifat Oron discussed the booming AI investment wave and its challenges. Levin highlighted that AI is driving US stock market gains but noted the extraordinary profit concentration around AI companies raises questions about the sustainability of demand and returns. She cited projections of $6-8 trillion in AI investments by 2030 but expressed skepticism about whether companies can generate sufficient profitability to justify such massive spending. Levin also referenced a 150-year historical perspective showing that despite technological revolutions, annual growth rates have remained around 2%, while AI investments require growth closer to 3.5% to be worthwhile.
Oron shared Blackstone’s perspective as a major investor in AI-supporting infrastructure, including a $10 billion acquisition of data center companies and further investments in Japan and other markets. She emphasized that demand for data center capacity currently doubles supply, with the market at about 100 gigawatts and demand at 200 gigawatts. Oron stressed that AI’s value chain extends beyond data centers to energy, electrical infrastructure, and software, and noted that traditional investment models are less effective given the rapid growth of some companies from zero to scale in under a year.
Both executives agreed the key challenge is selecting winning companies amid highly concentrated and fast-paced profitability. They also pointed to significant bottlenecks, particularly in energy resources and infrastructure, which could limit AI’s development speed. Oron noted that AI adoption in software remains early stage, and Blackstone prefers to invest only after identifying sustained technology use rather than initial hype.
Regarding Israel’s ability to attract international capital amid security uncertainties, Oron acknowledged geopolitical challenges but pointed to recent deals that defy the conflict narrative. She credited Israel’s demographic growth, advanced high-tech sector, and strengths in semiconductors, cyber, and defense industries. Levin reaffirmed BlackRock’s commitment to Israel, noting the firm has invested about $41 billion in the Israeli economy without slowdown, supporting stable and globally competitive companies.
