“AI overshadows everything”: BlackRock and Blackstone ask whether the profits will follow
Anath Levin, Managing Director, Country Manager, Israel at BlackRock, and Yifat Oron, Senior Managing Director at Blackstone, Head of Tel Aviv office, say the AI revolution is driving unprecedented investment, but investors still need to identify which companies can turn the boom into sustainable returns.
The massive investment wave surrounding artificial intelligence continues to drive global capital markets, but behind the enthusiasm are growing questions about whether companies can justify their valuations and whether the unprecedented scale of spending will ultimately generate sufficient returns.
Those questions were at the center of a conversation between Anath Levin, Managing Director, Country Manager, Israel at BlackRock, and Yifat Oron, Senior Managing Director at Blackstone, Head of Tel Aviv office, during a panel moderated by Sophie Shulman at the National Economic Conference.
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National Economic Conference (from left): Yifat Oron, Anath Levin, Sophie Shulman.
(Photo: Orel Cohen)
According to Levin, artificial intelligence has become the primary force driving U.S. stock markets higher, while also contributing to an unusual concentration of corporate profits.
"AI overshadows everything," she said. "The incredible profitability in the American markets is very concentrated, especially around AI. The question is what kind of demand this reflects and how long and sustainable it will be."
Levin said investments in AI infrastructure and technologies are expected to reach $6-8 trillion by 2030, but questioned whether companies will be able to generate returns that justify such enormous spending.
"We examined the profitability of companies and found that there is currently a gap between profitability and the level of investment," she said. "The question is whether these investments will ultimately justify themselves."
Levin added that historical comparisons offer no clear answer.
"We looked back 150 years, during which there were revolutions that changed humanity, but the average growth rate remained around 2% annually," she said. "To close the gap created by the required investments, growth would need to accelerate to around 3.5%, and the question is whether that is possible."
According to Levin, the answer could depend on whether technology succeeds in creating a meaningful acceleration in productivity and economic growth.
"The role of investors is to identify the companies that can translate innovation into long-term profitability," she said.
Oron presented the perspective of Blackstone, one of the world's largest alternative asset managers and a major investor in the infrastructure supporting the AI revolution.
She highlighted the firm's investments in data centers, including a roughly $10 billion acquisition in the sector, as well as additional investments in data center companies in Japan and other markets.
According to Oron, demand for AI infrastructure is significantly outpacing supply.
"We understand that demand is greater than supply and that there is currently not enough capacity to meet it," she said. "The market today represents around 100 gigawatts of data centers, while demand is double that, reaching 200 gigawatts."
However, she emphasized that the AI value chain extends far beyond data centers and includes energy infrastructure, electricity networks, semiconductor capabilities and software companies.
"The AI revolution is not only about building data centers. It requires investment across the entire ecosystem."
Investors face challenge of separating winners from hype
Oron said the rapid pace of technological change has made traditional investment models less effective.
"The old models are less relevant, and predicting the future has become more difficult," she said. "We see companies growing from zero to 100 at unprecedented speed, sometimes in less than a year."
"This creates situations where some companies are valued above their fundamentals, but there are also companies where the opposite is true."
Levin agreed that identifying the AI trend itself is no longer the challenge. The difficulty is determining which companies will ultimately emerge as winners.
"Today's profitability is highly concentrated and is being generated at very high levels," she said. "The investor is left with the question of whether they can identify the companies that will continue growing and distinguish them from those that will not."
Both executives pointed to infrastructure constraints that could limit the pace of AI expansion.
Levin highlighted pressure on energy resources, infrastructure and the enormous amount of capital required to support the AI boom.
Oron focused on electricity supply as one of the industry's biggest challenges.
"The energy world is becoming a bottleneck, particularly around electricity transmission," she said. "Whoever opens that bottleneck will win."
At the same time, she said AI adoption in software remains at an early stage.
Blackstone, she explained, prefers to invest after identifying repeated and sustainable customer adoption rather than simply responding to initial excitement around new technologies.
Israel still attracts global capital despite uncertainty
The two executives also discussed Israel's ability to continue attracting international investment amid ongoing security challenges.
Oron acknowledged that geopolitics cannot be ignored but said recent transactions demonstrate continued investor confidence.
"There have been recent deals that do not reflect a country at war," she said.
According to Oron, Israel's advantages come from a combination of demographic growth, a strong technology sector and leadership positions in areas including chips, cybersecurity and defense technologies.
Levin also emphasized BlackRock's continued commitment to Israel.
She said the company has helped Israeli investors access global markets for years while also investing approximately $41 billion in the Israeli economy.
"It has not slowed down at all in recent years," she said. "There are stable, large companies here that also compare favorably on an international level."
