BlackRock CEO Larry Fink: The capex needed for AI infrastructure is only going to grow
# BlackRock CEO Larry Fink Discusses US-China Relations and AI Infrastructure
In a recent interview, BlackRock CEO Larry Fink shared his perspectives on US-China relations and the growing importance of AI infrastructure investment. His insights reveal both geopolitical considerations and significant investment opportunities in the technology sector.
## US-China Relations: Necessity of Dialogue
Fink expressed an optimistic view regarding future US-China relations, despite current tensions:
– He believes a strong relationship with China will eventually emerge “in one form or another”
– Advocated for a new trading agreement that could benefit US agriculture and energy sectors
– Specifically mentioned potential opportunities for China to purchase $100 billion in US agricultural products and significant amounts of LNG from US producers
– While hopeful for improved business relations, he acknowledged ongoing tensions will remain around technology issues
## AI Infrastructure: The Growing Investment Opportunity
Fink firmly dismissed concerns about a potential peak in data center development:
– “There’s no peak” in data center growth, he stated emphatically
– Capital expenditure for AI infrastructure “is only going to grow as we democratize AI”
– Increased utilization will drive demand for more data centers
– Modern data centers require massive investment—approximately $50 billion per gigawatt facility
## Investment Economics and Competition
The interview revealed interesting dynamics between technology companies and infrastructure investors:
– Data centers typically generate 11-14% returns even with leverage
– Tech companies like Microsoft prefer to have financial institutions like BlackRock finance data centers rather than owning them directly
– This arrangement allows tech companies to maintain higher PE ratios
– Fink emphasized the urgent need for the US to maintain its technological edge, noting “China’s not slowing down” in their technology investments
– He described the situation as a “Sputnik” moment requiring competitive response
– Called for aggressive infrastructure development, particularly in power generation capacity to support AI
## BlackRock’s Performance
Fink concluded by highlighting BlackRock’s strong performance:
– The company experienced 14% technology growth
– Excluding one client who withdrew low-fee index business, BlackRock saw $140 billion in flows
– Their equity assets increased despite broader market conditions
– The company achieved 6% net fee growth, outperforming street estimates of 3
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