Blackstone's President on Why AI Disruption Risk Beats Bubble Risk

In a Bloomberg interview, Blackstone's president argues that the market is focused on the wrong AI risk. While everyone debates whether AI is a bubble, the real danger is disruption risk: what happens when entire industries change overnight, the way the internet wiped out Yellow Pages or Uber upended the taxi business.

Disruption Is Already Happening

Two recent examples illustrate the speed of change. JP Morgan announced it will stop using proxy advisors and replace them with AI. Lemonade said that if you drive a self-driving Tesla, they will cut your insurance rates by 50%. Each of these decisions immediately raises questions for adjacent industries. What does AI-powered insurance mean for collision repair companies? What happens to the proxy advisory industry when the biggest bank replaces it with software?

Where the Risk Is Concentrated

Rules-based businesses are the most exposed. Accounting, legal, and any industry built on applying structured logic to structured data faces direct substitution risk from AI agents. Low-value IT services businesses and intermediary companies are particularly vulnerable, because agentic commerce could eliminate the middleman entirely.

The key question for any business is whether it is a vertical software product that serves as the system of record for a business, which is hard to rip out, or a horizontal software product where switching costs are low and AI can easily replace it.

How Blackstone Is Responding

Every deal Blackstone does now includes an AI risk assessment in the first two pages of the investment memo. They evaluate each potential investment on its specific exposure to AI disruption rather than applying a blanket view across sectors.

Key Takeaways

• The biggest AI risk for investors is disruption, not a valuation bubble
• Rules-based businesses (accounting, legal, IT services) face the most direct threat
• Vertical software with high switching costs is safer than horizontal software
• Blackstone now puts AI risk analysis on page one of every investment memo