BlackRock’s Larry Fink Says Data Centers ‘Are Not The Problem’ – Moratorium Would Trigger US Recession

According to Fink, a lot of the U.S. economy's growth is currently dependent on the artificial intelligence build-out and the associated capital expenditure.

• The BlackRock CEO said data center construction creates jobs and pointed to shortages of electricians, plumbers and welders.
• Fink called for more private capital so that the U.S. GDP could continue to grow at a 3% annualized rate.
• He said BlackRock had spoken with AMD and Broadcom about the effort.

BlackRock (BLK) CEO Larry Fink said on Wednesday that a moratorium on data center construction in the U.S. would trigger a recession, adding that the economy's growing reliance on AI infrastructure makes private capital essential to sustaining economic growth.

“If we have a moratorium of some sort in this country, we will be in a recession,” Fink said in an interview with CNBC. “So much of our economy is based on the build-out of this capex.”

According to him, data centers are “not the problem,” instead, they’re helping create jobs even as the U.S. faces shortages of electricians, plumbers and welders. In Fink’s opinion, the U.S. unemployment rate of around 4% is favorable as compared to historical standards.

BlackRock Looks To AMD, Broadcom, Google In Chip Financing Push

“We need to unlock private capital to grow the U.S. economy by 3%,” Fink said. He pointed to growing competition for capital as government borrowing rises and companies seek financing for new investments, noting that national debt has climbed to $40 trillion from $8 trillion in 2000.

Fink said BlackRock is working with hyperscalers and chipmakers to develop a financing model that could make it easier to fund computing infrastructure. The effort involves gathering data on how long chips remain useful and what value they retain over time.

The initiative could help establish credit ratings based on the residual value of chips, potentially opening the door to securitizing AI hardware and attracting more private investment.

“I've spoken to every one of the chip manufacturers in the last two weeks on this,” Fink said, naming Advanced Micro Devices (AMD) and Broadcom (AVGO). He also pointed to Alphabet (GOOG, GOOGL)-led Google's development of its own tensor processing unit (TPU) chips as an example of the expanding range of AI hardware.

Fink said the effort could take about a year as BlackRock gathers data and works with rating agencies. The goal is to create financing structures that allow investors to fund computing assets beyond the balance sheets of the largest technology companies.

BlackRock Posts Q3 Earnings, Revenue Beat

Fink’s comments come after BlackRock reported third quarter (Q3) earnings and revenue that beat Wall Street estimates. Earnings per share (EPS) came in at $15.93, above analysts’ forecast of $14.15 cited by Koyfin. Revenue jumped 19% year-over-year to $7.75 billion, ahead of the $7.42 forecast. Assets under management (AUM) hit a record $15.5 trillion. 

BLK stock rose over 1% in morning trade. On Stocktwits, retail sentiment around the bank climbed to ‘extremely bullish’ from ‘bullish’ territory over the past day. Platform data showed that chatter jumped 175% over the last 24 hours and over 1,000% over the last week in the run-up to the bank’s earnings. 

Fink’s comments come after Dell (DELL) CEO Michael Dell said on Tuesday that the U.S. economy is starting to understand the impact of artificial intelligence. According to him, growing scrutiny over data centers and their energy and water use has not materially changed Dell’s expectations for next year. 

Fink echoed Dell’s perspective, stating that concerns about data centers, including their water use, are based on misinformation.

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