OFFICE OF THE CIO

2026 Investment Perspectives

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January 12, 2026

A time of change presents a compelling moment for investors.

2026 begins with a global economy that has shown resilience through a year of sharp swings. In 2025, policy shifts, geopolitics, and rapid innovation — especially around AI — drove volatility and a steady stream of unsettling headlines, yet growth, particularly in the US, held up and the impact of new technology became increasingly visible across the private sector. That combination of disruption and durability sets the tone for the year ahead. Several macro events are already on the horizon in 2026, including changes in Federal Reserve leadership and voting governors, ongoing effects of tariffs and uncertainty over US trade policy, US midterm elections, and continuing fiscal challenges across several large economies.

Success in this environment requires looking past sentiment and staying grounded in hard data and long-term fundamentals. Our proprietary insights, informed by 270+ portfolio companies, ~13,000 real estate assets, 5,000 corporate borrowing relationships, and an extensive infrastructure portfolio, allowed us to do exactly that in 2025, helping us deploy nearly $100 billion through 3Q25 and turn volatility into opportunity.^{[ 1 ]}

Our investment perspective this year centers on the five dynamics shaping markets: AI investment and productivity gains, solid but uneven growth, a cooling labor market, moderating inflation, and the declining global cost of capital. Together, they are creating an attractive backdrop for investors able to stay ahead of change and act with conviction.

We begin by examining those forces and how we see them reshaping the economic landscape, then turn to what they mean for private markets.

Key Takeaways

01

AI is rewiring the investment landscape, driving a multi-year CapEx cycle in data centers, power, chips, and connectivity — funded largely by cash flows, not debt — while laying the foundations for future productivity gains and investment opportunity.

02

Growth remains resilient but uneven, supported by strong corporate balance sheets, improving margins, moderating wages, and healthy consumer demand — though spending has been increasingly concentrated among higher-income households.

03

Cooling inflation is giving central banks room to lower interest rates, and the combination of falling borrowing costs and pent-up demand to transact is driving a rebound in deal activity that we expect to continue in 2026.

04

Private markets are positioned to benefit from these major megatrends, including AI, digital infrastructure, and energy transition. They are differentiated from public market alternatives through the platform scale, data accessibility, operational toolkit, long duration of capital, and structured approach they offer investors — creating opportunities for growth, durability, and downside protection in the current environment.

05

Across private equity, real estate, credit, and infrastructure, momentum is building, with expanding opportunity sets, improving exit markets, falling financing costs, and sector-specific catalysts creating a favorable backdrop in 2026.

Five Factors Driving Markets

1. Artificial Intelligence
2. Growth
3. Labor Market
4. Inflation
5. Cost of Capital

1. Artificial Intelligence

2. Growth

3. Labor Market

4. Inflation

5. Cost of Capital

The Main Thing

AI is the most consequential force shaping the global economy today. Adoption is happening at unprecedented speed, with over 1 billion monthly active users of ChatGPT — up from fewer than 200 million just two years ago.^{[ 2 ]} While overall adoption has been rapid, the impact on productivity and margins is still in early stages, with far greater long-term potential. This is fueling major investment in the infrastructure that makes it all possible, from data centers and chips to power grids and connectivity.

There has been widespread debate about an “AI bubble.” But today’s dynamics differ meaningfully from past bubbles. The largest AI investments are being funded directly from the cash flows of many of the world’s strongest companies, underscoring both the strength of balance sheets and just how essential this spending has become. Hyperscalers are set to increase CapEx by 45% YoY in 2026 (see Figure 2), but demand for compute continues to outpace supply, as infrastructure and power remain the primary constraints.^{[ 3 ]}

In 2025, the top five hyperscalers spent an estimated $415 billion on CapEx, a manageable amount relative to their approximately $1.7 trillion in combined revenue (see Figure 3).^{[ 4 ]} This primarily self-funded CapEx is very different from the largely debt-financed CapEx seen in earlier infrastructure booms such as US railroads or the dot‑com bubble.^{[ 5 ]}

Beyond infrastructure, AI is gradually beginning to transform how companies operate: accelerating software development, improving decision-making, and enabling more personalized customer engagement. Our portfolio data reflects this momentum — in a survey of our portfolio company CEOs, 77% of respondents increased AI‑related software spend in Q3, compared to under 50% for non‑AI software (see Figure 4).^{[ 6 ]}

While valuations of AI‑focused companies may rise and fall, we have high conviction in the transformative impact of AI over time, and its potential to drive meaningful productivity growth throughout the economy. AI is also a disruptive force, and staying ahead of that disruption is critical, particularly in sectors where the technology carries potential to reshape long-term earnings power.

Figure 1
Months to Reach 100 Million Users^{[ 7 ]}

Figure 2
Hyperscaler CapEx Spend^{[ 8 ]}
(MSFT, AWS, Google, Meta, Oracle; $ in billions)

Figure 3
CapEx as a % of Revenue^{[ 9 ]}

Figure 4
Blackstone Surveyed CEOs Increasing AI-Related Software Spend^{[ 10 ]}
Compared to 2024, do you expect your 2025 software CapEx in regard to AI and non-AI spend to increase?

See next factor driving markets
Resilient, But Uneven

Growth remains positive but bifurcated. We believe a generational investment opportunity is taking shape, fueled by technology, infrastructure, and energy transition spending, while interest rate-sensitive sectors like housing and manufacturing have lagged. AI-related spending, already a meaningful contributor to growth, is increasing. As the world’s largest tech companies continue to raise CapEx spending plans, we see little evidence that this momentum will fade in the near term.

Our view on the US economy has remained consistently constructive, informed by early signals in our portfolio. In 2025, year‑over‑year revenue growth in our US portfolio companies accelerated from 7% in Q1 to 8% in Q2 and 9% in Q3, alongside over 600bps of margin expansion over the past three years, from 29% to 35% as of Q3.^{[ 11 ]} Public data echoes this momentum, with US GDP growth rising 4.3% in Q3 and more than 80% of S&P 500 companies beating earnings expectations.^{[ 12 ]} Labor productivity is also accelerating, rising 4.9% QoQ SAAR in Q3 — the fastest pace in two years, which we believe is contributing to stronger earnings and margins.^{[ 13 ]}

Overall, US corporate balance sheets are in excellent shape, with lower leverage, lower funding costs, and substantial capacity to invest. Falling costs of debt service provide additional support, with corporate interest expense at its lowest level in 50 years (see Figure 6).^{[ 14 ]}

By contrast, government debt and deficits have continued to rise. This dynamic has helped push term premiums higher and it remains important for investors to monitor this closely. Strong fundamentals have supported healthy consumer spending, which accelerated to 3.5% in Q3 (QoQ annualized).^{[ 15 ]} But this strength masks underlying disparities: The top 40% of earners accounted for roughly three-quarters of consumer spending, driving outperformance in premium and luxury categories while value segments softened.^{[ 16 ]} This divergence is evident in the hotel sector, where demand for budget accommodations has slowed while premium properties remained strong (see Figure 7).

Figure 5
Blackstone US PE Portfolio Companies Average Revenue Growth^{[ 17 ]}
YoY, as of 3Q25

Figure 6
US Nonfinancial Corporate Business Gross Interest Expense^{[ 14 ]}
Percent of Revenue

Figure 7
US Hotel Revenue Growth per Available Room^{[ 18 ]}
YTD YoY; as of Dec 27, 2025

See next factor driving markets
Continued Cooling

Labor markets have continued to cool after a prolonged period of tightness. These dynamics have been consistently visible in our portfolio company data, which showed early signs of normalization ahead of broader market indicators. Hiring challenges, which ranked as the top concern among our surveyed portfolio company CEOs in early 2022, was cited as an issue by 92% of respondents at the time but has fallen sharply — only 33% reported it as a major issue by late 2025 (see Figure 8).^{[ 19 ]} Hourly wage growth has also moderated from 5.3% two years ago to 2.9% today (see Figure 9), helping to reduce inflation and giving the Fed additional room to bring down interest rates.^{[ 20 ]}

Labor market dynamics and consumer behavior warrant continuous attention. There has been an increasing move to a “low hire, low fire” job market, another unique aspect of today’s economy. A sharper slowdown in hiring or wage growth, while helpful for inflation, could dampen consumer spending, which is already showing K-shaped patterns, while a market correction could affect affluent households that are more exposed to equity markets. We are also closely monitoring the implications of AI for labor demand over time.

Figure 8
Blackstone CEOs Experiencing Hiring Challenges*

*Source: 3Q25 Blackstone CEO Survey. Includes input from 95 Blackstone Portfolio Companies (57 US CEOs). Survey initiated September 9, 2025, and closed September 25, 2025. Results prior to 2Q25 are sourced from prior quarters’ decks; therefore, sample sets are not like for like.

Figure 9
Blackstone US Portfolio Wages, Hourly*
YoY, as of November 2025

*Source: From Blackstone’s monthly November Chief Human Resource Officer Survey (CHRO). Includes input from 11 Americas portfolio company responders (~57,000 employees).

See next factor driving markets
Shelter Indicates Further Easing

Inflation is easing beyond labor, a shift we have been seeing for more than two years. We have unique visibility into the single biggest component of inflation: shelter. Official shelter costs, which account for roughly 35% of the Headline Consumer Price Index (CPI), carry about a one-year lag relative to our real-time data (see Figure 10).^{[ 21 ]} Our data shows shelter inflation running at roughly half the official rate.^{[ 22 ]} Substituting our figure for the reported shelter number would place Headline CPI at 2.0% rather than 2.7% (see Figure 11).^{[ 23 ]}

This visibility has been especially valuable during periods when government data has been delayed or disrupted. Cooling shelter costs, combined with moderating wages, create a more predictable environment for renewed transaction activity.

There are, of course, potential risks. Energy and certain commodity prices may continue to be volatile in 2026. Electricity prices in particular could rise as investment catches up to structurally higher power demand from data centers and US reindustrialization. Companies are also adjusting supply chains in response to new trade policy, which may raise some operating costs. In addition, elevated US government debt, now roughly $38 trillion — 124% of US GDP — and continued fiscal deficit spending have kept term premiums higher amid expectations of increased Treasury issuance.^{[ 24 ]} Lastly, geopolitical friction increases uncertainty. That said, inflation’s overall trajectory continues to look favorable, and longer-term, technology-fueled productivity gains should help lower costs as well.

Figure 10
Blackstone Derived Inflation Data Leads Official Numbers by ~12 Months^{[ 25 ]}

Figure 11
Official Inflation Figures vs. BX-Derived Inflation Figures^{[ 25 ]}

See next factor driving markets
Fueling Activity

The cost of capital is falling as central banks lower interest rates. Globally, financing conditions have improved: Debt markets have reopened, business sentiment remains positive, and liquidity is being supported in part by roughly $40 billion in monthly Treasury bill purchases. With interest rates and borrowing costs moving lower, deal-making has been picking up. Corporations are also benefiting from retroactive tax provisions under the One Big Beautiful Bill Act, which should support growth — particularly in sectors that lagged over the past year — and provide additional support to earnings.

Our data reflects this improvement. Capital markets activity across our portfolio totaled $124 billion in Q3 across both debt and equity, signaling a meaningful pickup.^{[ 26 ]} Potential exit activity is also robust, with our IPO pipeline as of Q3 at its strongest since 2021. Industry-wide trends are consistent with what we’re seeing, with US M&A volumes up 63% in Q3 — driven by large deals and sponsor activity (see Figure 12).^{[ 27 ]}

Figure 12
Accelerating Capital Markets Activity^{[ 28 ]}

International Markets

Improving Environment

Global economic conditions are showing signs of cautious improvement heading into 2026. Inflation is stabilizing, interest rates are moving lower across most regions, and central banks cut rates more than 200 times in 2025.^{[ 29 ]} The lower cost of capital has supported a broad market rally, with the MSCI World ex-US up 27% for 2025 — its strongest gain in 16 years.^{[ 30 ]} But growth in international markets also remains bifurcated.

In Europe and the UK, for example, the outlook is uneven. In the UK, growth has been muted. Despite real wage gains, the savings rate is above the pre-pandemic trend. Further, the UK attracted the lowest level of investment among G7 nations in 2025.^{[ 31 ]} Overall, a weaker labor market and shortfall of both consumption and investment — combined with over-indebtedness in the government sector (above 100% of GDP today) — continue to weigh on growth.^{[ 32 ]} However, inflation has moderated and the Bank of England’s recent 25bps rate cut in December should add support to the economy at the margin. In the euro area, inflation has also cooled, and the labor market has proven more resilient, with unemployment near all-time lows.^{[ 33 ]}

At the same time, elevated government debt (for example, 117% of GDP in France) is constraining fiscal flexibility on the continent.^{[ 34 ]}

Structurally, Europe also has less exposure to the technology sector, both as a driver of economic growth and within public equity markets, limiting participation in the AI investment cycle relative to the US. Yet, despite ongoing policy complexities, both markets selectively offer high-quality opportunities at attractive valuations. Taking a thematic approach that prioritizes growing businesses is especially important in Europe and the UK given the weaker regional economic backdrop. A recent example of our strategy in action is logistics, one of our highest-conviction sectors, where last year we purchased $7 billion in European platforms, including the acquisition of Proudreed in France and take-private of Warehouse REIT in the UK.^{[ 35 ]}

In Asia, India continues to stand out as one of the most dynamic growth markets globally. Rising incomes, strong domestic demand, and an active IPO environment — among the strongest in the world — are reinforcing momentum. Q2 FY 2025 GDP growth reached 8.2%, the strongest in six quarters, reflecting broad-based expansion across services and manufacturing (see Figure 13).^{[ 36 ]} We believe private valuations remain attractive relative to public markets, supporting opportunities to buy and build businesses at meaningful discounts. Infrastructure investment, digital adoption, and policy continuity continue to support a multi-year growth runway.

Figure 13
India Real GDP Growth^{[ 37 ]}
YoY; as of September 2025

Japan offers a complementary opportunity, grounded in value and structural change. Public companies frequently trade below intrinsic value, creating opportunities for privatization, operational improvement, and the application of technology and AI to unlock earnings potential. Recent policy shifts have added to the opportunity: fiscal stimulus is aimed at bolstering domestic demand, and the Bank of Japan has moved further away from long-standing zero rates as inflation and wage growth broaden.

These shifts have pushed 10-year JGB yields above 2% — a 26-year high — as fiscal policy aims to stimulate corporate investment and productivity gains.^{[ 38 ]} Reflecting this momentum, the government has raised its fiscal 2025 and 2026 growth forecasts, supported by stronger consumption — more than half of GDP — and an increase in private investment.^{[ 39 ]}

Figure 14
Japan 10-Year Government Bond Yield Jumps to a 26-Year High^{[ 40 ]}

The Opportunity for Private Markets

Against the current macro backdrop, private markets can offer the right combination of resilience, flexibility, structural protection, and exposure to durable growth — making them well-positioned to help portfolios navigate uncertainty and capture opportunity in the year ahead.

Public equity markets are more concentrated today than ever before, with half the number of US public companies vs. nearly 30 years ago (see Figure 15). The ten largest S&P 500 companies now make up about 40% of the index — double their share in 1990 — while fewer companies are going public overall (see Figure 16).^{[ 41 ]}

At the same time, stock-bond correlation has been positive more than 70% of the time since 2022 (see Figure 17). As a result, the natural diversification that once supported a traditional “60/40” portfolio has eroded, becoming less reliable as a risk-management foundation.^{[ 42 ]}

With nearly 90% of large, profitable businesses remaining privately held, private markets provide access to opportunities unavailable elsewhere. Anchored in durable cash flows, operational improvement, and powerful secular demand, private markets can offer a path to rebuild diversification and strengthen portfolio resilience.

Figure 15
Number of US-Listed Public Companies Decreased by Half^{[ 43 ]}

Figure 16
Concentration of the 10 Largest S&P Companies Has Doubled in the Past 35 Years^{[ 44 ]}

Figure 17
Stock-Bond Correlation Positive ~80% of the Time^{[ 45 ]}
2022–3Q25

Figure 18
Median US IPO Age^{[ 46 ]}
2000–2024

Private Equity
Private Real Estate
Private Credit
Private Infrastructure

Private Equity

Private Real Estate

Private Credit

Private Infrastructure

The Deal Dam is Breaking

Private equity enters 2026 with strong momentum. Public equity markets have rallied, with the S&P 500 returning 16% in 2025 and trading at 22x forward earnings — well above the 15-year average of 17x (see Figure 19).^{[ 47 ]} This is partially a reflection of solid fundamentals: Corporate earnings are forecasted to grow 12% in 2025, and 15% in 2026.^{[ 48 ]} It also reinforces a widening valuation gap between public and private markets. Historically, private equity has outperformed when public valuations were at these levels.

At the same time, structural shifts across markets are creating a broad set of compelling opportunities — ranging from secondaries, supported by the continued growth of alternative assets; to life sciences, where innovation and discovery remain robust; to absolute return hedge fund strategies, which can offer higher risk-adjusted returns in an increasingly concentrated public market. Each of these is an example of the growing role of alternative asset managers as solutions providers — of both capital and expertise — to investors and the economy.

Better financial conditions, solid GDP growth, and renewed appetite for large transactions are driving an upswing in deal activity — particularly in the markets where we invest. Deals over $1 billion nearly doubled year-over-year in 2025 (see Figure 20), and we expect this rebound to continue as deployment opportunities expand.^{[ 49 ]} Realizations have also improved.^{[ 50 ]} At Blackstone, our private equity segment had $34 billion of realizations over the last 12 months through 3Q25. Our record-setting December IPO of Medline underscores this shift: The offering was upsized to $7.2 billion, marking the largest US healthcare IPO in history, trading 40% above its IPO pricing at the end of the year — a strong signal for 2026.^{[ 51 ]} This momentum is not limited to the US: For example, 2025 IPO activity on the London Stock Exchange was the highest in four years, signaling stabilizing global capital markets and growing investor confidence.^{[ 52 ]}

Figure 19
Public Equity Valuation^{[ 53 ]}
S&P 1-Year Forward P/E

Figure 20
Private Equity Deal Activity ($1B+)^{[ 54 ]}

See next opportunity
Cyclical Recovery Underway

Real estate appears to be in the early stages of its cyclical recovery, after private market values troughed in 2023, marking the third major downturn in the past 45 years — the result of higher interest rates, a pullback by lenders, elevated new supply, and structural challenges in sectors such as US office (see Figure 21).^{[ 55 ]} In the prior two downturns in the early 1990s and the Great Financial Crisis, private real estate delivered double-digit average annual returns over the following five years^{[ 56 ]} as fundamentals and capital markets recovered. We believe, similarly, that today presents one of the most attractive entry points for investors in recent years (see Figure 22).^{[ 57 ]}

Further, what were headwinds are becoming tailwinds. Borrowing costs are now roughly 40% lower than peak levels in 2023, materially improving equity yields (see Figure 23).^{[ 58 ]} However, the speed of recovery has varied across sectors and markets. For example, sectors with long-term structural demand tailwinds, such as multifamily and logistics, have navigated historically elevated levels of supply, but most new completions are now behind us. With new construction starts down more than 60% from the peak, this headwind should continue to fade in 2026 (see Figure 24).^{[ 59 ]}

In addition to this cyclical improvement, secular demand remains robust across our highest-conviction themes — reflected in remarkable AI-driven demand for data centers, the continued expansion of e-commerce supporting warehouse absorption, and sustained growth in rental housing driven by a rising renter population and observed migration toward the Sunbelt. We see liquidity is also returning, with global real estate transaction volumes up ~20% YoY on a trailing twelve-month basis through 3Q25, particularly in sectors that lacked depth just six to twelve months ago.^{[ 60 ]}

This combination of lower financing costs and constrained development is creating attractive conditions for value appreciation. We have leaned in accordingly, and invested $40 billion in real estate since valuations bottomed at the end of 2023.^{[ 61 ]} Our ownership of US single-family homes remains limited — representing about 2% of our real estate AUM and 0.5% of the firm overall — and we have been net sellers over the past decade, reducing holdings by more than one-fifth. That said, we believe our current portfolio is poised to continue to perform quite well and operate at the highest standards for residents.

Figure 21
Values Have Reset, Offering Attractive Absolute and Relative Value^{[ 62 ]}
Green Street Commercial Property Price Index, April 2022 = 100

Figure 22
Private Real Estate Index Performance^{[ 63 ]}
NCREIF Property Index (YoY%)

Figure 23
Declining Financing Costs^{[ 64 ]}
Representative US BX Logistics Transactions

Figure 24
Construction Starts: Today vs. Recent Peak^{[ 65 ]}
(2Q25 vs. 2022)

See next opportunity
Opportunity For Safety Amidst Uncertainty, Expanding Opportunity Set

We continue to see private credit as a durable asset class, with structural characteristics that can be advantageous and enduring for investors. Its direct, “farm-to-table” origination model is designed to remove distribution and securitization costs and designed to allow investors to capture more return, while providing borrowers with speed, certainty, and flexible partnership. Private credit has significantly outperformed leveraged loans over the past 20 years (see Figure 25).^{[ 66 ]} Today, it continues to offer 200bps-250bps of excess return.^{[ 67 ]} Low leverage, matched funding, and conservative structures can also make these vehicles stabilizing forces within the financial system.

Still, performance dispersion within non-investment grade credit is widening, making scale, origination reach, and sector expertise essential. Larger businesses have continued to outperform, while smaller companies have faced greater challenges with both top-line growth and margin pressure. We remain focused on lending to larger enterprises. Our portfolio companies have an average EBITDA of $256 million, well above the private credit market average of $99 million.^{[ 68 ]} This positioning aligns with recent performance trends — over the LTM through the third quarter, companies with EBITDA above $100 million grew EBITDA over five times faster than those with EBITDA below $50 million(see Figure 26).^{[ 69 ]}

Private credit has also proven defensive during periods of stress, historically outperforming equities and leveraged loans in downturns. Because direct lending loans sit at the top of the capital structure, they are first in line for repayment and generate high current income. Today’s loan-to-value ratios are well below historical levels, so more than half of a company’s value must be impaired before lenders are affected (see Figure 27). Over the past twenty years, the S&P 500 posted negative annual returns three times; in each of those periods, private credit significantly outperformed equities and leveraged loans, twice delivering positive absolute results (see Figure 28).^{[ 70 ]}

Looking ahead, we are optimistic about deployment opportunities in 2026, as evidenced by our fourth-quarter deal screening activity up more than 25% year-over-year. We see the opportunity set continuing to expand across both investment grade and non-investment grade credit, extending beyond sponsor-backed lending into financing the real economy — an addressable market exceeding $30 trillion (see Figure 29).^{[ 71 ]} Asset-backed finance, infrastructure credit, and real estate credit remain early in their transition to private capital and stand to benefit from generational needs in energy, digital infrastructure, and power.

Figure 25
Private Credit vs. Leveraged Loan Returns^{[ 72 ]}
Yield to Maturity (YTM), as of Nov 2025

Figure 26
EBITDA Growth by Size^{[ 73 ]}
3Q2025 YoY LTM EBITDA Growth

Figure 27
Average Loan-to-Value^{[ 74 ]}
Historical HY and Bank Loan Data for US LBOs

Figure 28
Private Credit Relative Outperformance During Downturns^{[ 75 ]}
Years with S&P Downturn over Last 20 Years

Figure 29
Private Credit Markets Are Rapidly Growing as a Core Financing Solution for the Global Economy^{[ 71 ]}

See next opportunity
Powering the AI Buildout

Infrastructure is in a supercycle driven by advances in technology. AI-linked investments and US reindustrialization are adding significantly to current and future power demand, making infrastructure a pillar of economic growth. Reliable power, durable grids, and robust transmission are now determining factors for AI expansion, creating a compelling investment opportunity set.

Simultaneously, the digitization of commerce and proliferation of data throughout the economy is accelerating, fueling greater demand for fiber and cellular infrastructure and data centers. And the combination of growing global travel — a $1.6 trillion market in 2024 — and rising household consumption is increasing utilization of the roads, ports, and airports that make the global movement of people and goods possible.

To address this wave of demand, an estimated $106 trillion of global infrastructure investment is needed through 2040 (see Figure 30), with roughly 75% concentrated in sectors where we have deep conviction—digital infrastructure, power generation, transportation, and renewables (see Figure 31).^{[ 76 ]} AI adoption and electrification, in particular, are growing steadily, widening the gap between demand and supply to create a multi-decade runway for growth.

Capital expenditures by hyperscalers to build data centers totaled $415 billion in 2025, a number that’s projected to increase meaningfully in 2026 and beyond.^{[ 77 ]} These investments — alongside the reshoring of US manufacturing, electrification, and expanding electric vehicle fleets — are driving record demand for power and energy. US electricity generation is on track to grow over 40% cumulatively in the next 10 years — the fastest pace since the 1970s.^{[ 78 ]}

Europe is also underinvested in energy and data infrastructure with relatively less data center capacity (trailing the US by 2-3 years)^{[ 79 ]} and increasing electricity demands that are expected to grow 12x faster than in the past.^{[ 80 ]} These pressures only add to the need for rapid deployment of new generation and flexible, dispatchable sources of power.

Over the past three years, the typical timeline-to-power for data centers in the US has increased from about one year to now more than seven years, intensifying the strain on existing systems and limiting new data center supply growth. We are also seeing greater use of “Bring Your Own Power” models, with hyperscalers looking for partners to build their own generation infrastructure rather than wait for utility hook-ups. We expect this to remain an active area for private infrastructure capital to invest.

Renewable energy remains attractive given lower costs, shorter development timelines, and hyperscaler sustainability goals. Even so, natural gas power plants are emerging as a compelling option for data center power needs because they can deliver reliable, uninterrupted output without intermittency.

Private infrastructure has a relatively low correlation with other asset classes, providing portfolios with diversification, stable (often contracted) cash flows, and inflation protection. Consequently, it has historically outperformed public markets with less volatility across cycles. Secular tailwinds, historical underinvestment, and a generational AI Capex wave are converging to create compelling infrastructure investment opportunities today.

Figure 30
Sizing the Infrastructure Opportunity^{[ 81 ]}
Private Infrastructure AUM

Figure 31
Expected Future Infrastructure Needs^{[ 81 ]}
Investment Required Through 2024 ($ in trillions)

Figure 32
Private Infrastructure Has Outperformed Public Equities with Half the Volatility^{[ 82 ]}

Positioned for What’s Next

2026 is expected to be another year of accelerating change and opportunity, and we see real reasons for optimism. Investment activity is strong, and last year’s tax cuts should provide incremental support to household consumption, while easing inflation and healthy capital markets are providing additional tailwinds. Importantly, hard data — investment, spending, earnings — continues to show resilience. Business sentiment also remains constructive: More than 80% of our surveyed CEOs expect the US economy to continue expanding and 63% of these CEOs expect higher margins.^{[ 83 ]} Looking forward, AI adoption, moderating cost pressures, and emerging productivity gains are helping drive down the global cost of capital and support a recovery in M&A.

At the same time, we remain alert to the risks that could reshape the path ahead. Geopolitical shocks, unexpected policy moves, and rapid swings in sentiment throughout 2025 demonstrated how quickly narratives can diverge from fundamentals.

Persistent volatility remains a defining feature of the market environment. The coming year will bring its own surprises, creating opportunities for us to capitalize on dislocations through our real-time data, our long-term capital, and the perspective on markets these advantages provide.

We also expect this year to bring even greater performance dispersion across managers. In this environment, staying attuned to change as it happens — and anticipating it — has never been more important.

We believe private markets are well-positioned for this moment, and can offer access to durable cash flows, operational upside, and diversification at a time when public markets are increasingly concentrated. With conviction in our secular themes, disciplined underwriting, unique platform scale, and a data-driven investment process, we believe 2026 presents a compelling opportunity for Blackstone to deploy capital and generate long-term value by staying ahead of what comes next.

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No Assurance of Investment Return. Prospective investors should be aware that an investment in a fund is speculative and involves a high degree of risk. There can be no assurance that a fund will achieve comparable results, implement its investment strategy, achieve its objectives or avoid substantial losses or that any expected returns will be met. A fund’s performance may be volatile. An investment should only be considered by sophisticated investors who can afford to lose all or a substantial amount of their investment. A fund’s fees and expenses may offset or exceed its profits. Third-Party Information. Certain information contained herein has been obtained from sources outside Blackstone, which in certain cases have not been updated through the date hereof. While such information is believed to be reliable for purposes used herein, no representations are made as to the accuracy or completeness thereof and none of Blackstone, its funds, nor any of their affiliates takes any responsibility for, and has not independently verified, any such information. In particular, you should note that, since many investments of the Funds may be unquoted, net asset value figures in relation to funds may be based wholly or partly on estimates of the values of such funds’ investments provided by the originating banks of those underlying investments or other market counterparties, which estimates may themselves have been subject to no verification or auditing process or may relate to a valuation at a date before the relevant net asset valuation for such fund, or which have otherwise been estimated by Blackstone.

Trends. There can be no assurances that any of the trends described herein will continue or will not reverse. Past performance does not predict future returns.

NOTICE TO INVESTORS IN THE UK AND THE EEA. In the UK, Belgium, Denmark, Finland, The Republic of Ireland, Italy, Lichtenstein, and Norway, this communication issued by Blackstone Europe LLP (“BELL”) of 40 Berkeley Square, London, W1J 5AL (registration number OC352581), which is authorized and regulated by the Financial Conduct Authority (the “FCA”) (firm reference number 520839) in the United Kingdom and which maintains appropriate licenses in other relevant jurisdictions. In the EEA, other than in Belgium, Denmark, Finland, the Republic of Ireland, Italy, Lichtenstein, or Norway, this communication is made by Blackstone Europe Fund Management S.à r.l. (“BEFM”) of 2-4 Rue Eugène Ruppert, L-2453, Luxembourg (registration number B212124), which is authorized by the Luxembourg Commission de Surveillance du Secteur Financier (reference number A00001974). This communication is intended only for the person to whom it has been sent, is strictly confidential and must not be distributed onward. This communication does not constitute a solicitation to buy any security or instrument, or a solicitation of interest in any Blackstone fund, account or strategy. The content of this communication should not be construed as legal, tax or investment advice.

ISRAEL. No action has been or will be taken in Israel that would permit a public offering of a fund, or distribution of this document to the public in Israel. This document has not been approved by the Israel Securities Authority. This document is being distributed only to and is directed only at persons who are Qualified Investors within the meaning of The Securities Law, 5728-1968 (Israel). Persons who are not Qualified Investors must not act on or rely on this document or any of its contents. Any investment or investment activity to which this document relates is available only to Qualified Investors and will be engaged in only with Qualified Investors. Qualified Investors in receipt of this document must not distribute, publish, reproduce, or disclose this document (in whole or in part) to any person who is not a Qualified Investor. Neither the general partner, nor the investment advisor, is registered or intends to register as an investment adviser or an investment portfolio manager under the Israeli regulation of investment advice and investment portfolio management law, 5755-1995 (the “investment law”). Furthermore, these interests are not being offered by a licensed marketer of securities pursuant to the investment law.

SWITZERLAND. In Switzerland, this material is for the exclusive use of qualified investors as defined in article 10(3) Swiss Collective Investment Schemes Act (“CISA”).

MIDDLE EAST (UAE, DIFC, ADGM, Jordan, Saudi Arabia, Lebanon, Kuwait, Qatar, Bahrain, and Oman). The information contained in this document does not constitute and should not be construed as an offer of, an invitation or proposal to make an offer for, recommendation to apply for, or an opinion or guidance on a financial product, service and/or strategy. Whilst great care has been taken to ensure that the information contained in this document is accurate, no responsibility can be accepted for any errors, mistakes or omissions or for any action taken in reliance thereon. The information in this document does not constitute investment advice and should not be relied upon as the basis for any investment decision. You may only reproduce, circulate and use this document (or any part of it) with the consent of Blackstone. The information contained in this document is for information purposes only. It is not intended for and should not be distributed to, or relied upon by, members of the public. No marketing or solicitation or inducement activities are being used to offer or market any specific products based on the information contained herein. The information contained in this document is general and may contain statements that are not purely historical in nature but are “forward looking statements”. These include, amongst other things, projections, forecasts or estimates of income. These forward-looking statements are based upon certain assumptions, some of which are described in other relevant documents or materials. All information contained herein is subject to change without notice. If you do not understand the contents of this document, you should consult an authorized financial adviser. PWS202404310S Approved for professional / qualified investors in the EEA , UK, Israel, Switzerland, UAE , DIFC, ADGM, Jordan, Saudi Arabia, Lebanon, Kuwait , Qatar, Bahrain, and Oman.

Forward Looking Statements

This commentary may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect our current views with respect to, among other things, the macroeconomic environment, economic growth trends and drivers, transaction activity, business performance, and the opportunity for and potential benefits of private markets. You can identify these forward-looking statements by the use of words such as “outlook,” “indicator,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “scheduled,” “estimates,” “anticipates,” “opportunity,” “leads,” “forecast,” “possible” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, as such factors may be updated from time to time in our subsequent filings with the United States Securities and Exchange Commission (“SEC”), which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report and in our other periodic filings. The forward-looking statements speak only as of the date of this commentary, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

OFFICE OF THE CIO

2026 Investment Perspectives

January 12, 2026

A time of change presents a compelling moment for investors.

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