Blackstone's Gray Says AI Buildout Needs More Equity as Pimco's Roman Warns Financing Could Become 'Too Much'

The people who finance the AI boom say it will need a lot more money. They do not agree on where it comes from, or whether markets can hold it all.

Speaking Tuesday, Nov. 3, at the Hong Kong Monetary Authority's Global Financial Leaders' Investment Summit, Blackstone President Jon Gray said the AI buildout needs more equity financing. His reasoning: lenders are piling up exposure to the same companies and the same sector.

Shareholders can profit from a company's growth. Lenders, Gray noted, are mostly limited to interest and principal.

The numbers on the table

Pimco CEO Emmanuel Roman put figures on the problem. He cited General Atlantic CEO Bill Ford's estimate that AI-related capital spending could reach about $10 trillion over the next five years. About $550 billion in AI debt has been issued in various forms so far this year, Roman said.

The global corporate bond market is roughly $20 trillion. Even with a mix of debt and equity, Roman called the required amount "gigantic."

"At some point in time, it's going to be too much," he said.

Goldman Sachs estimated in a report Monday that global data center demand will need about $8.5 trillion in capital spending over five years. Combined tech spending this year is set to exceed $730 billion, up from about $700 billion, according to the summit coverage of the event.

Gray: demand outruns supply

Gray was not sounding a retreat. He said demand for computing power is "running well ahead of supply," calling it "pretty extraordinary." Spending on AI models across Blackstone's portfolio companies has risen 20-fold over the past year, he said, driven by coding, customer engagement and content creation.

He expects the financing to come from public markets, banks, private capital and cash generated by the hyperscalers. Companies are increasingly using structured transactions to limit how much debt they carry. "The creativity is needed because the scale of capital is enormous," Gray said.

He pointed to "Meta and Google and Oracle raising equity," and to SpaceX and Anthropic going public, as signs of what is coming. He also said sites, permits, chips and power are getting harder to secure, and that the rising cost of capital will slow the pace somewhat. Gray also said some AI investments "will go awry," and framed the task as investing in the most downside-protected way.

The skeptics on the same stage

JPMorgan Vice Chairman Daniel Pinto said he is bullish on AI but that the market is pricing in revenue and earnings growth that is too steep. "I do believe that it has a positive, slow curve and it may not be as steep as the market is pricing," Pinto said. "So I think that it could be a correction in the AI sector."

Goldman Sachs CEO David Solomon said strong companies with "good stories" will still raise capital. He added: "Investors will find situations where they pick wrong, where they lose money."

Citadel Securities CEO Peng Zhao said nobody can reliably value what the technology will earn. "We've never seen anything like this," he said.

Goldman's own financing analysis, published Oct. 28, was more upbeat. Mahesh Saireddy, global co-head of its Capital Solutions Group, said he believes the buildout will get financed, while warning of corrections. Goldman also noted the largest cloud companies remain relatively lightly indebted and generate strongly positive free cash flow.

Where the cash is going

The latest earnings show why the debate is live. The Nasdaq Composite fell 5.3% in October, its worst month since March 2025.

Alphabet's third-quarter capital spending jumped 114% year on year to $51.4 billion. Its free cash flow swung from positive $24.55 billion a year earlier to negative $9.07 billion.

Meta's capital expenditure hit 52.5% of revenue and its free cash flow was negative $1.157 billion. It raised the low end of its full-year spending guidance by $5 billion, to $135 billion.

Amazon's trailing-12-month cash capex stood at about $220 billion against negative free cash flow of $42.36 billion. Alphabet and Amazon both forecast higher AI capital spending in 2027.

Microsoft reported fiscal first-quarter revenue of $92.3 billion on Oct. 28, up 19% and above consensus estimates. Its capital expenditures on property and equipment were $39.4 billion, nearly double the $19.4 billion of a year earlier. On Oct. 29 it announced a $25 billion corporate debt issuance.

U.S. hyperscalers have issued about $225 billion of bonds this year, according to figures cited at the summit. S&P said last month it expects the top six U.S. hyperscalers to spend more than $7 trillion on data centers and other AI capex between 2025 and 2030, with negative free cash flow until at least next year.

What comes next

Gray's equity call carries a practical implication. If the big spenders raise stock rather than borrow, existing shareholders absorb dilution instead of bondholders absorbing default risk. If they keep borrowing, the lenders Gray is worried about carry more of it.

The open question is whether free cash flow at Alphabet, Meta and Amazon turns positive before the debt and equity raises Gray expects arrive in size. Alphabet and Amazon have already signaled higher spending for 2027.