Market Views: Is Everything a Bubble?

Jon Gray, Blackstone President & COO: So the big thing these days is talking about bubbles. They say there’s a private credit bubble, there’s an AI bubble, there’s a stock market bubble. And not saying there aren’t risks of excesses, but looking at the full picture, I think, is really important. So I might gently pop each one of these three bubbles.

There’s been a lot of headlines on private credit because of some idiosyncratic non-private credit blowups. The reality, the facts on the ground are so compelling because what is private credit at the end of the day? It’s basically taking an investor and bringing them right up to a borrower. And in the process, you eliminate a lot of the origination, securitization, financing costs that eat up the return. What we continue to see is lending to high-quality, large-scale businesses, you can earn a meaningful premium to what you can in liquid credit. And so, to me, that’s going to continue to make private credit quite attractive.

AI is the main thing. And to make this AI a reality, we’ve got to build a lot of infrastructure. We got to build a bunch of data centers and a ton of power. And that requires enormous amounts of capital. And then that will lead to a huge step function increase in productivity. And as a firm at Blackstone, we’re thinking about our private equity, our real estate, our credit, our infrastructure. What are all the different ways we should play this? And also be looking over our shoulders a little bit and saying, what’s the disruption that’s coming?

And then finally, in the stock market, yes, valuations are full. But this isn’t what we experienced in 2000, when the biggest market cap company, Cisco traded at 130 times, versus Nvidia today at 30 times.⁽¹⁾ I don’t want to be, ‘Everything’s great, trees grow to the sky’. There will be mistakes, there will be challenges. But if you think fundamentally of productivity revolution and investment boom are happening, maybe we should pay a little more for the stock market in that context. The deal-making environment is definitely getting better. In the U.S., M&A activity was up over 60%. IPO activity was up 100%. We took three companies public globally in the third quarter. That was the first time that happened since 2021. We’ve seen high yield spreads come down in half basically from their wides. Our credit pipeline in terms of new deals is up 20% year-on-year and obviously that means the folks here at 345 Park Avenue are much busier.

Notes:
1. Nvidia stock price as of October 31, 2025. All figures as of September 30, 2025 unless otherwise noted.

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