BlackRock Chief Executive Larry Fink pushed back against rising concerns over data center expansion, arguing that much of the opposition is rooted in misinformation.
In an interview, Fink said, "There's a lot of mythology and fear about data centers. Much of it is based on misinformation, and much of it is wrong," specifically addressing complaints about water usage by pointing out that "golf courses use more water than data centers." He warned that given how much the U.S. economy depends on the current wave of sustained capital expenditure construction, any pause in data center development could trigger a recession. "Data centers are not the problem. In terms of workers, they are creating more new jobs than ever before," he said.
BlackRock (BLK.US) reported third-quarter earnings showing assets under management reached a record $55 trillion. The firm recorded $205 billion in new client inflows.
The BlackRock chief highlighted an unprecedented phenomenon in capital markets, saying that for the first time in his 50-year career he has observed a genuine shortage of capital. Fink explained, "Our government is demanding more and more credit. Bond auctions are getting bigger, bigger, and bigger," noting that U.S. Treasury debt has grown from $8 trillion in 2000 to $40 trillion today — an increase of $32 trillion in just 26 years.
To address the capital shortage and enable smaller companies to access computing power, Fink outlined BlackRock's (BLK.US) efforts to securitize GPUs and other chip assets. "Democratize compute; that's the only way to make it happen," he said, explaining that startups lack credit ratings but need computing power to compete. By working with hyperscale cloud providers and chip companies to gather chip lifespan data, BlackRock (BLK.US) aims to obtain credit ratings based on chip residual value, potentially creating a market similar to the $15 trillion mortgage-backed securities (MBS) industry.
Fink also shared his views on the broader labor market and the potential economic impact of AI. He noted that the U.S. currently faces shortages of electricians, plumbers, welders, and nurses, and that at a recent BlackRock conference, 80% of healthcare organizations reported nurse shortages.
Rather than viewing AI purely as a threat to employment, Fink suggested that countries with aging populations like Japan could leverage robots and AI to boost productivity, thereby ushering in a "demographic dividend." He remains convinced that the U.S. can grow its way out of deficit problems, but only if economic growth reaches 3% or higher.
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