The AI boom is not only enriching chip giants, but also nurturing Wall Street "super toll booth"! BlackRock, Inc. (BLK.US) asset management scale breaks through $15 trillion.

Wall Street's largest asset management giant, BlackRock, Inc. (BLK.US), announced its latest performance report in pre-market trading on Wednesday. The company's asset management products accumulated $192 billion in client net inflows in the second quarter, amidst the unprecedented prosperity of AI investments that have swept through global stock markets. Investors flocked to BlackRock, Inc.'s vast line of exchange-traded funds (ETFs), driving the total assets under management to surpass the $15 trillion mark for the first time. BlackRock, Inc. is representing the core realization of the AI super bull market in asset management, becoming the most important indirect beneficiary and capital allocation platform of the AI boom. The performance and outlook of the four major financial giants on Wall Street, which were announced in reports on Tuesday, indicate that the AI investment boom has evolved from a semiconductor industry cycle to a super cycle of capital formation: mega-scale cloud providers, data center operators, AI unicorns, and chip giants need to continuously convert huge capital expenditures into deliverable computing power through corporate bonds, stock issuance, mergers and acquisitions, project loans, and structured financing. At each stage, Wall Street banking giants earn underwriting, advisory, financing, and market-making income. BlackRock, Inc. strives to transform the unprecedented AI investment boom into a more sustainable growth in asset size and management fees. By capitalizing on the rising popular tech stocks related to AI infrastructure and encouraging investment from high-net-worth clients in technology and thematic ETFs, as well as participating in data centers, power grids, and energy infrastructure through large-scale private credit and infrastructure funds to earn continuous high management fees. The first half of 2026 saw a record $1 trillion inflow in global ETF funds, with stock ETFs attracting $680 billion. The technology, energy, and industrial sectors have become the main directions for industry ETF fund inflows; BlackRock, Inc.'s research team predicts that by 2030, global tech companies, including US tech giants, will need to invest approximately $5-8 trillion in AI computing-related capital. The report specifically indicates that regardless of the winning model or AI application pattern, assets related to AI data center computing power infrastructure, such as electricity, memory/storage, AI chips, data center CPUs, and optical interconnection systems, are essential scarce resources. According to Goldman Sachs Group, Inc., the AI computational power super bull market is far from over, moving from "AI chip buying frenzy" to the second stage of "massive construction of AI factories" meaning that the next round of excess alpha returns will no longer belong solely to the AI GPU/AI ASIC domain, but will systematically spread to high-performance CPUs in data centers, DRAM/NAND/HBM storage, AI PCBs, liquid cooling systems, data center optical interconnection systems, ABF substrates/glass substrates, MLCCs, electronic fabrics, and widespread wafer foundry services in the "AI factory" full-stack AI computational power infrastructure layer. Senior analyst Brian Nowak from Morgan Stanley, a Wall Street financial giant, led the analysis team in releasing a new research report on July 12, which significantly raised the 2027/2028 capital expenditure forecasts for the world's five largest cloud computing and manufacturers (Meta, Amazon.com, Inc., Microsoft Corporation, Alphabet Inc. Class C, SpaceX), reaching approximately $1.2 trillion and $1.4 trillion respectively. The institution's capital expenditure forecast for major US tech giants in 2026 has been raised from $433 billion a year ago to $805 billion. Morgan Stanley's latest research raised Meta's 2027 and 2028 capital expenditure forecasts by 29% and 22% to $225 billion and $250 billion, respectively; Amazon.com, Inc.'s corresponding forecasts were raised by 15% and 29% to $308 billion and $318 billion. Morgan Stanley stated that the super cycle of capital expenditures is not over yet, but 2026 and 2027 may be the years of the steepest increase in growth rates, and from 2028 onwards, stock prices will no longer be determined by "who spends the most money," but by "who can most quickly transform AI computing resources into revenue, profit, and free cash flow." BlackRock, Inc. surpasses $15 trillion in assets under management! In a single quarter, it attracted $192 billion, significantly increasing its share buybacks. In a performance statement released on Wednesday, BlackRock, Inc. stated that investors added $53 billion to actively managed funds, driving the asset management giant's second-quarter revenue to increase by 31% compared to the same period last year, reaching $7.1 billion. Usually, BlackRock, Inc.'s revenue sources include investment advisory and administrative fees based on asset management size, securities lending revenue, performance fees for private equity and alternative products, technology and subscription services revenue like Aladdin, as well as distribution and consulting fees; as assets under management reached approximately $15.3 trillion, driven by high-fee actively managed products and private equity assets, along with the contribution from the HPS acquisition, total revenue increased by 31% compared to the previous year to around $7.1 billion - significantly higher than the market's expected range of around $6.7-6.8 billion. BlackRock, Inc.'s net profit surged by 20% to approximately $1.9 billion, with an adjusted operating profit margin increasing to 45.9%, the highest level in nearly five years. "The market fundamentals are strong and well supported, and the profit margin improvements and strong earnings momentum brought by new technologies are becoming incredibly strong positive catalysts," said Larry Fink, CEO of BlackRock, Inc., in the latest performance statement. The CEO added that the confidence in the company's growth prospects prompted the increase of its share repurchase program to approximately $2 billion for 2026. As of 6:28 am in New York, BlackRock, Inc.'s stock price rose by 5.3% in early trading. Clearly, the more valuable aspect is not the $15 trillion asset size record itself, but the increasing revenue growth gradually moving away from sole reliance on low-fee index funds and natural market growth. Organic base management fees increased by 8%, not only surpassing BlackRock, Inc.'s long-term target of around 5%, but also maintaining at least 5% growth for eight consecutive quarters; net inflows into liquid alternative investments and private credit reached $22 billion, higher than the $14.6 billion from the previous quarter, with private market contributing $15.4 billion. Active ETFs, systematic investments, private credit, and infrastructure product fees are generally higher than traditional index funds, coupled with the management fees from the acquisition of HPS in private credit, indicating that BlackRock, Inc. is forming a compounding loop of "asset size expansion - increase in high fee products - expansion of profit margins." BlackRock, Inc. reported a record $321 billion in global net fund inflows in the first half of the year. Long-term investment funds accumulated a net inflow of $199 billion, higher than the average market expectation of around $170 billion from Wall Street analysts. BlackRock, Inc.'s ETF business attracted approximately $178 billion, accounting for the vast majority of the new funding flowing into the asset management giant, while cash and money market funds recorded a net outflow of $7 billion. Adjusted earnings per share for BlackRock, Inc. in the quarter increased by 15% compared to the same period last year, reaching $13.91, significantly higher than the average analyst expectation of around $12.66 per share. The asset management giant reported that organic base management fees increased by 8%. This indicator tends to rise as more clients favor higher fee products. The fees from private market investing tools, systematic funds, and actively managed ETFs are higher than index fund types. The second quarter marked the company's eighth consecutive quarter of achieving 5% or more growth. Performance fees increased by $211 million compared to the same period last year, driven mainly by a significant increase in revenue from alternative investment products. The chart above depicts the quarterly long-term fund flow and total fund flow since the beginning of 2020 - BlackRock, Inc.'s assets under management surpassed the $15 trillion mark in the second quarter, even nearing $20 trillion. BlackRock, Inc. has long been a dominant player in stocks, bonds, and public market investments and is now transforming itself into one of the largest asset management companies in the private credit and AI computational power infrastructure markets, including acquiring the credit firm HPS Investment Partners for $12 billion in 2025. BlackRock, Inc. stated that the incremental costs related to the HPS transaction have driven revenue growth. In the second quarter, BlackRock, Inc. attracted $22 billion in liquid alternative investments and private credit assets, exceeding the $14.6 billion from the previous quarter. Of this, the private market accounted for approximately $15.4 billion of the alternative investment fund inflow size. By the end of Tuesday's U.S. stock market close, BlackRock, Inc.'s stock price had fallen by 4.2% year-to-date, significantly behind the 10.2% increase in the S&P 500 index. Global asset management giant transitioning into a "financial toll booth" for the AI computational power investment boom JPMorgan, Bank of America Corp, Citigroup, and Goldman Sachs Group, Inc. collectively earned approximately $38 billion in stock and bond trading revenue in the second quarter, a year-on-year increase of over one-third and approximately 60% higher than two years ago, with investment banking fees of about $10 billion; meanwhile, the capital expenditures of mega-scale cloud providers in 2026 were estimated to have reached approximately $725 billion, and AI-related debts are approaching 15% of the issuance of US investment-grade bonds. As a result, these banks are not traditional AI technology companies but have become financiers, trading intermediaries, and risk intermediaries in the AI arms race, through AI enterprise bond issuance, mergers and acquisitions, stock offerings, data center loans, and trading fluctuations. BlackRock, Inc., on the other hand, is harnessing the AI boom and transforming it into a compounding growth of asset size and management fees. In the second quarter, assets under management rose to $15.34 trillion, an increase of approximately 22% from $12.53 trillion in the same period last year; client net inflows were $192 billion, with long-term product net inflows of $199 billion, exceeding the market's expected $170 billion, ETFs attracted $178 billion, and actively managed products saw a net inflow of $53 billion. Revenue increased by 31% to about $7.1 billion compared to the same period last year, and adjusted earnings per share increased by 15% to $13.91, surpassing the market's expected range of $12.66-$12.69, and organic base management fees surprisingly grew by 8%. Furthermore, stock price increases and thematic fund inflows propelled the growth of publicly traded assets, while private credit, data centers, power, and infrastructure investments convert short-term market heat into longer-term, higher-fee assets; BlackRock, Inc. also directly enters the AI capital expenditure financing chain through the private credit platform HPS and infrastructure investments. BlackRock, Inc. is indeed becoming an important indirect beneficiary and capital allocation platform of the AI boom, but labeling it as a "pure AI concept stock" is not entirely accurate. Wall Street banks mainly earn fees through AI enterprise debt issuance, mergers and acquisitions, stock offerings, data center loans, and trading volatility; BlackRock, Inc., on the other hand, earns continuous management fees through the rise of AI stocks, the massive influx of investors into technology and thematic ETFs, and participation in data centers, power grids, and energy construction through private credit and infrastructure funds. BlackRock, Inc. is not a hardware manufacturer strictly related to AI computational power infrastructure but rather a recipient of the AI wealth effect and a capital formation fee platform spanning public stocks, bonds, private credit, and infrastructure; this approach is more sustainable than relying solely on market trading volume, but once the AI computational power infrastructure theme is overvalued, positions become overcrowded and highly leveraged, or if AI capital expenditures or market risk sentiments reverse, its assets under management and management fees will also face cyclical pressure.