Blackstone

Blackstone ended June with $962 billion in fee-earning assets under management, up 2.6% sequentially and 8.4% year over year. In the second quarter, total revenue increased 35.9% year over year to $5.0 billion and fee-related earnings increased 22.2% to $1.8 billion.

Why it matters: Blackstone continues to generate strong flows. Its mix of alternative products—through its real estate, private equity, multi-asset investing, and credit and insurance segments—is benefiting from ongoing demand for nontraditional products. The firm picked up $68 billion from fundraising efforts in the June quarter, above its quarterly run rate of $56 billion in the previous eight quarters. Blackstone also deployed $34 billion during the second quarter, just below its quarterly run rate of $35 billion over the past two years. Reported realizations of $32 billion were above the quarterly run rate of $29 billion during the previous eight quarters. Going forward, we expect more conducive capital markets to lead to above-average levels of realizations, further supporting fundraising and deployment efforts.

The bottom line: With $1.346 trillion in total AUM, Blackstone remains the largest alternative-asset manager in the world. Effective fundraising, deployment, and realization activity has allowed the firm to continue to grow organically, despite the more volatile markets of the past five years. As there was little in wide-moat Blackstone's second-quarter results that would alter our long-term view of the firm, we expect to leave our $140 fair value estimate in place. The shares are modestly undervalued right now relative to our fair value estimate. This is a big improvement from where they were trading in early March in response to heightened concerns about the private credit market.

Distributable earnings (which remove the effects of unrealized activity) were $2.0 billion, or $1.52 per share, in the second quarter, compared with $1.6 billion, or $1.21 per share, in the year-ago period. This was comfortably above the FactSet consensus estimate of $1.34 per share and our estimate of $1.37 per share. 

Even with the increased volatility we've seen in the equity and credit markets the past several quarters, we still expect AUM to expand in the near term at Blackstone. We've only seen one quarter of net negative flows from the firm in the past five years despite all the headwinds in the equity and credit markets following the Fed's rising-rate phase in 2022-23, as well as the private credit scare this past year. 

Total fundraising of $68 billion in the June quarter was above the $52 billion of the year-ago period, as well as the $56 billion quarterly run rate for flows over the past two years. 

Second-quarter fundraising included $8.2 billion for the real estate segment, including $2.1 billion for Blackstone Real Estate Debt Strategies primarily from $1.1 billion in a drawdown fund focused on nonopportunistic real estate credit, $2.0 billion from the initial public offering of Blackstone Digital Infrastructure Trust, and $1.2 billion of capital raised by Blackstone Real Estate Income Trust. 

The company also picked up $24.5 billion from its private equity segment, including $5.7 billion for the company's fifth energy transition fund, $5.7 billion in secondaries (primarily from the 10th flagship secondaries strategy), and $2.8 billion in infrastructure fund capital. Blackstone's multi-asset investing segment also raised $4.6 billion during the June quarter. 

As for credit alternatives, Blackstone raised $31.0 billion in the second quarter, above our expectations given all of the hysteria surrounding the private credit market. The company's inflows included $13.3 billion for its global direct lending strategies, inclusive of $1.0 billion of capital raised for Blackstone Private Credit Fund. Inflows also included $9.9 billion for infrastructure and asset-based credit strategies, inclusive of $7.5 billion tied to insurance separately managed accounts. 

More importantly, Blackstone said that while it is still early in the third quarter, redemption requests for BCRED are down materially. During the first quarter, the fund reported that redemption requests hit 7.9% of net asset value, amounting to around $3.7 billion. Blackstone honored 100% of these first-quarter requests by temporarily increasing its quarterly repurchase limit to 7% (from the stated 5%), with the firm and its employees investing roughly $400 million to cover the remaining 0.9%. 

During the second quarter, redemption requests hit 10.0% of net asset value, amounting to around $4.4 billion, which led the fund to cap redemptions at its stated 5% threshold, amounting to a $2.2 billion payout for the June quarter. That said, much of the elevated redemption request activity was closer to the start of the quarter as opposed to the end, with demand for redemptions easing as the second quarter progressed. 

Blackstone deployed $34 billion during the June quarter, which was on par with deployments in the year-ago period, although slightly below the quarterly run rate of $35 billion during the past two years. That said, Blackstone has seen several of its highest quarterly deployments take place during the past two years as the Fed paused its short-term rate hikes and started working toward fiscal easing. 

Second-quarter deployments included $5.8 billion for the real estate segment (including investments by Blackstone Real Estate Partners in a joint venture with Related Digital to develop a data center campus in Michigan, as well as a separate investment by the fund in a large logistics platform in France), $14.5 billion in private equity (including investments in Hologic, Champions Group, and Arlington Industries), $12.7 billion in credit alternatives (driven by infrastructure and asset-based credit strategies and global direct lending), and $1.1 billion in multi-asset investing. 

Blackstone reported $32 billion in realizations during the second quarter, above the $23 billion in monetizations recorded in the year-ago period as well as its quarterly run rate of $29 billion during the previous eight quarters. Realization activity in the second quarter included the Digital Realty joint venture and Lumina in the real estate segment and Sabre Industries and Desotec in private equity. 

Management said this disposition activity reflected a transaction environment that was strengthening in the latter part of 2025 and first half of 2026. As we noted in our last Industry Pulse for the alternative-asset managers, after several years of equity and credit market volatility, higher interest rates, and uneven issuance activity, the US market for initial public offerings has taken off in 2026, while the environment for mergers and acquisitions has experienced a gradual recovery in activity, with deal size increasing over time. 

Historically, higher IPO and M&A deal volume has signified a more robust environment for alternative-asset managers to exit their investments, allowing their funds to realize returns, secure capital for future investments, and/or distribute capital to investors. 

Blackstone continues to be our top pick among the seven publicly traded alternative-asset managers we cover. We believe that the company has built a solid position in the alternative asset-management industry, utilizing its reputation, broad product portfolio, investment performance record, and cadre of dedicated professionals to raise massive amounts of capital and maintain a reputation that it has developed over the years as a go-to firm for investors looking for exposure to alternative assets. 

Its product portfolio is well diversified across the four main segments of the private capital markets—private equity, real estate/real assets, private credit, and other alternative offerings—and the firm primarily serves institutional and high-net-worth clients. With demand for alternatives increasing and institutional investors limiting the number of providers they use, large-scale players like Blackstone are well positioned to continue fundraising, deployments, and realizations well above their peers. 

For more insight into the trends and other issues affecting the alternative-asset managers, which influence our long-term forecasts for these firms, please see our latest Industry Pulse, "US Alternative-Asset Managers: 2026 Q2," published June 30. We also have a broader industry primer available for all of the US-based asset managers in our annually updated Industry Landscape, "US Asset Managers," published in December 2025.

We've raised our fair value estimate to $147 per share from $140 to reflect revised expectations and the effects of the time value of money since our last update. Our fair value estimate implies price/earnings multiples of 24.6 and 19.5 times our 2026 and 2027 estimates for distributable earnings per share, respectively. For some perspective, during the past five (10) years, the shares have traded at an average of 27.0 (22.2) times trailing earnings on an adjusted basis, with the highest (lowest) multiple the past decade being 42.5 (8.7) times. We use a 21% US statutory corporate tax rate and an 11.2% (10.3%) cost of equity (weighted average cost of capital) in our valuation.

Consistent with other alternative-asset managers, we view fundraising, deployments, realizations, fee-earning AUM, base management fee levels, realized performance fees, and compensation costs as key drivers of our valuation. Total fundraising during 2025 was $239.4 billion, above full-year efforts of $171.5 billion in 2024, with Blackstone's credit segment accounting for more than half of the haul. Inflows of $136.8 billion during the first half of 2026 set the firm up for $225 billion-$275 billion in fundraising this year. Even so, we expect the company to raise $200 billion-$250 billion in new capital annually during 2026-30, owing to fundraising headwinds we foresee for the alternative credit markets.

Blackstone deployed $138.2 billion of capital during 2025, above full-year deployment efforts of $133.9 billion in 2024. First-half deployments of $67.9 billion in 2026 put the firm on pace to match last year's deployment levels. We expect Blackstone to put $135 billion-$160 billion to work annually during 2026-30. The firm also booked $67.8 billion in realizations during the first half of 2026, putting it on pace to surpass the $125.6 billion that was monetized during 2025. While we expect realizations to be more sporadic, they should be between $100 billion and $150 billion annually during 2026-30.

Blackstone exited June 2026 with $961.6 billion in fee-earning AUM, up 8.4% year over year, and total managed assets of $1.346 trillion, up 11.2% year over year. Over the next four and a half years, we see Blackstone's fee-earning and total AUM expanding to $1.191 trillion and $1.645 trillion, respectively. We expect modest fee compression, with base management fees increasing at a 5.2% CAGR during 2026-30. Realized performance and incentive fees will remain constrained, though total revenue is expected to increase at a 5.4% CAGR over our five-year forecast period.

Compensation costs averaged 39.3% of revenue during the past five years and should be in a range of 38%-41% during 2026-30. Distributable earnings (which remove the effects of unrealized activity) are likely to average around $10 billion annually during our five-year forecast. Our forecast for 2026 and 2027 distributable EPS of $5.98 and $7.52, respectively, is based on our expectations for distributable earnings of $7.4 billion and $9.4 billion during those years.

We project a bull-case fair value estimate of $228 per share and a bear-case valuation of $88 per share. Our upside case implies P/E multiples of 28.8 and 22.9 for our 2026 and 2027 distributable EPS estimates, respectively. This scenario assumes stronger equity market returns, capital-raising efforts, and realization levels, with the net result being a 9.2% (9.3%) CAGR for base management fees (total revenue). Distributable earnings per share would also be 20%-25% higher on average annually.

Our downside scenario implies P/E multiples of 18.4 and 14.6 times our 2026 and 2027 distributable EPS estimates, respectively. This scenario assumes weaker equity markets, lower levels of capital raising, and lower levels of realizations, with the net result being a negative 1.3% (negative 0.9%) CAGR for base management fees (total revenue). Distributable earnings would also be 20%-25% lower over our five-year projection period.

Unlike the more traditional asset managers, such as Invesco and T. Rowe Price, which focus on traditional asset classes like equity, fixed-income, balanced, and money market funds, alternative-asset managers like Blackstone deal with less-liquid alternative investments like private equity, credit alternatives, real estate/real assets, and hedge funds. Even so, we think that the alternative-asset managers, much like the traditional asset managers, benefit from switching costs (the core moat source) and intangible assets, which include organizational attributes—such as product mix, distribution channel strength, and geographic reach—and true intangibles—like strong and respected brands and manager reputations.

We assign Blackstone a Wide Morningstar Economic Moat Rating. The company has, in our view, built a superior position in alternative-asset management, using its reputation, broad product portfolio, investment performance/record, and a cadre of dedicated professionals to not only raise capital but maintain its reputation as one of the go-to firms for institutional and high-net-worth investors looking for exposure to alternative assets. Blackstone is currently the largest stand-alone alternative-asset manager in the world with $1.346 trillion in total managed assets, including $961.6 billion in fee-earning AUM, at the end of June 2026.

Blackstone operates with scale in each of its major product lines—private equity (with $454.2 billion in total AUM and $267.8 billion in fee-earning AUM), real estate/real assets ($314.2 billion/$277.5 billion), private credit and insurance ($469.3 billion/$318.2 billion), and multi-asset investing ($108.6 billion/$98.1 billion)—and distribution channels—institutional (84% of total AUM) and high-net-worth (16%)—where it competes, with a global reach that includes 25 offices in the Americas, Europe/Middle East, and the Asia-Pacific region. Blackstone has also built out a large base of employees—including in-house executives, consultants, and advisors—who have decades of industry experience and can revitalize a company through cost-cutting, acquisitions, or other strategic maneuvers, increasing the chance of producing a successful investment.

All these attributes have provided Blackstone with the ability to not only gather assets but also with the means of differentiating itself from peers. While the barriers to entry are not particularly significant for the industry, the barriers to success are extremely high. It takes time and skill to put together a long enough record of investment performance to start gathering assets and even more time to build the scale necessary to be competitive. BlackRock is the only legitimate traditional asset manager of size competing in this part of the market despite the fact that most of our coverage has been focused on building out alternative-asset manager offerings during much of the past decade.

On the switching cost front, alternative-asset managers like Blackstone (unlike their traditional brethren) have not had to rely heavily on investor inaction to keep annual retention rates high, as the products they offer tend to have lockup periods, preventing investors from redeeming part or all of their investment for a prolonged period. These types of arrangements have allowed Blackstone to post an annual retention rate of 94% (93%) on average annually for the past five (10) years, even with about one-third of its total and fee-earning AUM tied up in products that are redeemable on a quarterly basis.

Blackstone was the largest fundraiser among stand-alone publicly traded alternative-asset managers during the past decade, pulling in $1.418 trillion with its private equity ($337.9 billion), credit and insurance ($548.7 billion), real estate/real asset ($418.8 billion), and other alternative ($112.7 billion) offerings during 2016-25. Blackstone accounted for 18% (17%) of the industry's alternative credit fundraising during the past five (10) years, 21% (16%) of new commitments for real estate/real asset funds, 4% (4%) of the capital being raised for private equity/venture capital funds, and 6% (7%) of fundraising in the other alternatives category. Overall, Blackstone accounted for 10% (9%) of total new commitments to alternative products during 2021-25 (2016-25).

Over the past decade, Blackstone has raised nearly as much capital as its two largest stand-alone competitors—Brookfield and Apollo—combined. The firm also raised nearly as much as the next three largest stand-alone peers—KKR, Ares, and Carlyle Group—when looked at on a combined basis during the same period. That said, we do expect competition for new investor capital—which has traditionally centered on manager reputation, fund size, and investment performance—to only increase, especially with more traditional asset managers like BlackRock increasing their exposure to alternatives and showing a willingness to be fungible on fees.

During the past five (10) years, Blackstone has produced adjusted returns on invested capital that have been 1,400 (1,200) basis points above our estimated cost of capital for the company. We expect the firm to maintain its excess returns at these levels or higher over the next 5-10 years, given the amount of interest that still exists for alternatives and the potential for the retail market, a large untapped market for alternative assets, to open up gradually to the alternative-asset managers. While we see more potential headwinds than tailwinds during years 10-20, as rising concerns about the private credit markets, increased competition from peers, and increased pressure on fees as the industry matures, we expect the firm to continue to comfortably outearn our estimated cost of capital.

Blackstone, with $961.6 billion in fee-earning AUM at the end of June 2026, is a go-to firm for institutional and high-net-worth investors looking for exposure to alternatives.

Blackstone's ever-increasing scale, diversified product offerings, solid investment performance, and strong client relationships position the firm to perform well in a variety of market conditions.

Less than 15% of Blackstone's fee-earning AUM comes from bigger-risk areas like direct lending and opportunistic credit in the alternative credit market.

Downturns in the equity and credit markets could leave investors in Blackstone's funds with limited liquidity and large commitments to funds, making it more difficult for the firm to raise new capital.

Private equity and real estate are highly cyclical and heavily reliant on market-timing and investment exits to generate incentive income.

Competition for new investor capital is likely to increase as more traditional asset managers like BlackRock increase their exposure to alternatives and are willing to be more fungible on fees.