DeepSeek won’t crush AirTrunk’s $100bn dream, says owner Blackstone

Blackstone says its multibillion-dollar bet on data centres – including its $24bn investment in AirTrunk – still stacks up despite China’s low-cost model DeepSeek rattling global markets.

Blackstone says its multibillion-dollar bet on data centres – including its $24bn investment in Australian operator AirTrunk – still stacks up despite China’s low-cost model DeepSeek rattling global markets.

Blackstone has amassed more than $US80bn ($128.5bn) worth of leased data centres, and took over AirTrunk last year, as it has been “prudently” increasing its exposure to the artificial intelligence boom.

But the launch of DeepSeek last week – a model which reportedly cost $US5.6m to train compared with the billions Silicon Valley has invested in America’s best, including ChatGPT – has ignited debate about future demand for data centres.

DeepSeek built its model without access to the world’s most advanced chips from Nvidia and says it does not need the same level of computing power as ChatGPT and other US models.

Leaders of America’s so-called Magnificent Seven of tech companies are now scrambling to maintain their dominance in the AI race.

Some, such as Microsoft boss Satya Nadella, have put a positive spin on DeepSeek’s sudden arrival, saying it will only increase demand for AI.

Blackstone president Jonathan Gray agrees with Mr Nadella and said the alternative asset manager’s investment thesis in data centres remained intact.

“You’re looking at what’s going on, and it could have an impact on the nature of usage, but we’re still evaluating it. We’re talking to people about it, and at this point, we still see a lot of need for digital infrastructure and power,” he said.

“We still think this is a very favourable place to deploy capital.

“We have $US80bn of leased data centres. The good news in that business is these are long-term leased data centres with some of the biggest companies in the world.”

Jonathan Gray, president of Blackstone Group, says the firm’s data centre thesis remains intact.

Mr Gray said some of the group’s biggest customers had told it their plans were unchanged, and that Blackstone had no plans to alter what are currently ambitious investment goals.

“Maybe there’s a little less training that’s done as a result of less intensity but at the same time there’s more inference, maybe more cloud, maybe there’s more to do with enterprise.

“We have a sense in talking to our clients also that there’s a belief, as usage goes up significantly, there is still a vital need for data centres.”

Before DeepSeek arrived, AirTrunk founder and chief executive Robin Khuda said he could lift the company to become a $100bn business, largely from the AI investments of its biggest customers, including Microsoft, Google, Amazon and Oracle.

Microsoft is still steaming ahead with plans to invest $US80bn in AI this financial year. Facebook founder and Meta chief executive Mark Zuckerberg is planning to spend $US65bn and build a data centre “so large it would cover a significant part of Manhattan” to maintain its competitive edge.

“I would bet that the ability to build out that kind of infrastructure is going to be a major advantage for both the quality of the service and being able to serve the scale that we want to,” Mr Zuckerberg said.

And DeepSeek has its limitations. It can’t even say who Xi Jinping is, despite giving extensive details about Donald Trump, Anthony Albanese and other Western leaders, with it forming an extension of Chinese Communist Party censorship. It also draws blanks about the Tiananmen Square protests and massacre, and cannot explain China’s record on human rights, despite calling Australia’s a “mixed picture” and Australia Day “deeply divisive”.

Robin Khuda, AirTrunk Founder and CEO, says he can hoist the company into a $100bn colossus. Picture: Britta Campion

Blackstone reported its fourth-quarter earnings on Friday, which were buoyed by its investments in data centres and other AI infrastructure.

Chief executive Stephen Schwarzman said that its dedicated infrastructure strategy – Blackstone Infrastructure Partners – was the single biggest contributor to the firm’s results, generating $US1.2bn of fee revenues.

Mr Schwarzman said it was “one of the best quarters in our history”.

Blackstone posted distributable earnings of $US2.17bn for the quarter – or $US1.69 a share, 56 per cent more compared to the same quarter the previous year.

Net income surged to $US703.9m from $US151.8m a year earlier.

Originally published as DeepSeek won’t crush AirTrunk’s $100bn dream, says owner Blackstone