*

Blackstone allays investors on data center investments

*

DeepSeek's low-cost AI model upended global markets

*

Analysts remain optimistic on data center investments

despite

emergence of DeepSeek

By Niket Nishant and Manya Saini

Jan 30 (Reuters) - Blackstone said on Thursday

its massive investments in data centers would not be undermined

by the low-cost artificial intelligence models from China's

DeepSeek, as the need for physical infrastructure was still

vital for AI.

The alternative asset manager, which has $80 billion worth

of leased data centers, said its strategy for the segment was

grounded in a "very prudent approach" and touted its

partnerships with "some of the biggest companies in the world".

Data centers provide the infrastructure for storing,

processing and analyzing vast troves of information that are

crucial for training and running AI models.

Investors in data centers, such as Blackstone, were expected

to be some of the biggest beneficiaries of the AI boom as

increasing adoption led to higher demand for such

infrastructure.

But the sudden arrival of DeepSeek upended the tech world

and sparked a debate over demand, with worries that the

emergence of a low-cost option may slow investment in data

centers.

Blackstone's president and Chief Operating Officer Jonathan

Gray, in a post-earnings call with analysts, said the company

was closely watching developments tied to DeepSeek.

However, he expects lower costs could yet lead to a wider

adoption of AI, boosting demand for data centers.

"As usage goes up significantly, there's still a vital need

for data centers. We still think it's a very important segment,"

Gray said.

His comments echo views from analysts at Jefferies earlier

this week.

"In fact, we would be surprised to see hyperscalers slow

their capex plans as the AI space just got even more

competitive," they wrote.

DeepSeek's launch has triggered scrutiny from investors, who

are expected to analyze tech giants' AI spending plans closely

in the next few weeks.

CEOs of Microsoft ( MSFT ) and Meta also defended

massive AI spending this week saying it was crucial to staying

competitive in the new field.

Blackstone shares were last down nearly 4% in afternoon

trading.