02:06 PM EDT, 07/18/2024 (MT Newswires) -- Blackstone (BX) said Thursday that it sees "unprecedented" investment opportunities amid growing artificial intelligence adoption, while a potential monetary policy easing by the Federal Reserve later this year is expected to be positive for the firm's asset values.

Data centers are an "essential" part of AI, Blackstone Chief Executive Stephen Schwarzman said on a conference call discussing the alternative asset manager's second-quarter results, according to a Capital IQ transcript. Electricity demand in the US is expected to jump 40% over the next decade, compared with "minimal" growth in the last 10 years, amid the need to power fast-expanding data centers, Schwarzman said.

Roughly $1 trillion of capital expenditures are expected in the US over the next five years to build and facilitate new data centers, with another $1 trillion expected outside that market, Schwarzman told analysts. "We believe these explosive trends will lead to unprecedented investment opportunities for our firm," Schwarzman said. "Blackstone is positioning itself to be the largest financial investor in AI infrastructure in the world as a result of our platform, capital and expertise."

Schwarzman expects the Fed to start lowering its benchmark lending rate later in 2024 amid cooling inflation. "This should be very positive for Blackstone's asset values and provide the foundation for a significant realization cycle over time," he said.

Markets are widely expecting policymakers to again hold interest rates steady July 31, while the odds of a 25-basis-point cut in September were at nearly 94%, according to the CME FedWatch tool.

The firm's distributable earnings rose to $0.96 a share in the quarter through June 30 from $0.93 a year earlier, while segment revenue grew 7% to $2.52 billion. Analysts polled by Capital IQ were looking for $0.98 and $2.56 billion, respectively. Total revenue fell to $2.8 billion from $2.81 billion, while assets under management grew 7% to $1.076 trillion.

Blackstone shares were up 3% in Thursday afternoon trade.

Net realizations jumped 52% to $308.4 million in the quarter. However, the result was "still reflective of a backdrop that is not yet robust as it relates to scale dispositions," Chief Financial Officer Michael Chae said on the call. "As markets heal and liquidity improves, we are well-positioned for a significant acceleration in net realizations over time."

Fee-related earnings fell 3% year over year to $1.11 billion in the second quarter. In the fourth quarter, Blackstone expects "a material step-up" in fee-related earnings, Chae said. The firm declared a quarterly dividend of $0.82 per share, compared with its prior payout of $0.83, payable Aug. 5 to shareholders of record as of July 29.

Separately, Blackstone said funds managed by Blackstone Tactical Opportunities made a minority investment in Australian energy transition infrastructure services platform Symphony Infrastructure Partners. Symphony will use the proceeds to complete "multiple" pending acquisitions, according to a statement.

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