Should You Invest in Blackstone Despite Its Premium Valuation?

At a glance, Blackstone Inc. BX stock appears to be trading at a premium when compared with the industry. The company’s current forward 12-month price/earnings (P/E) ratio of 30.30 is above the industry average of 25.69. Also, BX’s P/E (F12M) ratio is somewhat near its high over the past five years, which suggests some level of overvalued trading compared with historical norms.

Even if we compare BX’s current valuation with two of its closest peers, Apollo Global Management, Inc. APO and The Carlyle Group Inc. CG, the stock appears relatively overvalued. Apollo Global has a P/E (F12M) ratio of 15.73 and Carlyle Group has a forward 12-month P/E ratio of 14.42.

BX’s P/E (F12M) Ratio

Thus, despite being the largest alternative asset manager, Blackstone’s not-so-favorable valuation may compel investors to stay away from the stock. This is primarily because, in the case of worsening industry conditions, premium stocks are at risk of valuation reversion to the mean, which results in sharp declines in the stock’s price.

In Blackstone’s case, during the 2008 financial crisis, the company’s performance deteriorated due to a low level of new commitments as investors were shying away from market-linked investments. Although BX was able to navigate the pandemic without funding-related problems, any change in the global macroeconomic situation toward the negative side can make the situation difficult for Blackstone.

However, at present, investors should not avoid BX completely just because of its premium valuation. Before making any investment decision, it is advisable to look at the company’s fundamentals and growth prospects to see if the higher valuation is justified or not.

Factors Aiding Blackstone’s Growth

Solid Assets Under Management (AUM) Balance: Blackstone has a solid AUM balance. Its total AUM and fee-earning AUM have recorded compound annual growth rates (CAGR) of 16.2% and 15.3%, respectively, over the last four years (2020-2024). The upward trend for both metrics continued in the first half of this year, with total AUM reaching a record $1.21 trillion as of June 30, 2025.

Blackstone’s AUM growth has been driven by continued solid capital inflows, growing private credit and insurance businesses, the company’s strategic investments in high-growth infrastructure and technology sectors, and a broad fundraising momentum.

BX has been allocating more toward private credit, an area receiving increasing interest from investors, given that traditional banks are withdrawing from certain lending roles. Moreover, the company’s investments in secular growth areas like digital infrastructure, artificial intelligence (AI) infrastructure, energy transition and life sciences are major tailwinds. 

While Blackstone’s expansion into private wealth channels and insurance platforms has helped in diversifying its revenue sources, new products like perpetual vehicles allow tapping demand from different kinds of investors.

Thus, the company’s diversified product base, solid revenue mix and superior position in the alternative investments space are expected to continue supporting AUM growth.

Robust Fundraising Ability: Despite a challenging fundraising environment for asset managers, Blackstone has been raising money. Fundraising for the global private equity and real estate funds resulted in Blackstone’s ‘dry powder’ or the available capital of $181.2 billion as of June 30, 2025.

In 2024 and the first six months of 2025, the company deployed $133.9 billion and $69.5 billion of capital, respectively. With substantial investable capital, Blackstone is well-positioned to take advantage of market dislocations. Accelerating growth in India and Japan offers attractive opportunities, supporting a strategic deployment of capital.

In April, Wellington, Vanguard and Blackstone announced the formation of an alliance to develop simplified multi-asset investment solutions combining public and private markets. Aiming to broaden investor access to institutional-quality portfolios, the collaboration leverages each firm’s strengths to address long-term diversification and return challenges in wealth and asset management.

Analyzing BX’s Price Performance

In the past three months, BX shares have gained 33.6%, outperforming the industry and the S&P 500 Index’s 8.6% and 12.2% rallies, respectively. While the company’s performance compares unfavorably with that of CG, its performance has been better than that of APO.

Carlyle Group shares have gained 42.3% and the Apollo Global stock has rallied 5.2% over the past three months.

3-Month Price Performance

Final Thoughts on Blackstone Stock

Blackstone remains well-positioned for growth, supported by high inflows and substantial capital for opportunistic investments. Strategic alliances and innovations in private credit and wealth management aim to boost revenues through expanded market reach and larger spreads.

Moreover, if we look at Blackstone’s earnings estimate revisions, it is clear that analysts are bullish on the stock. Over the past 60 days, the Zacks Consensus Estimate for BX’s 2025 and 2026 earnings has moved upward. The estimates indicate year-over-year growth rates of 7.8% and 29.9% for 2025 and 2026, respectively.

Estimate Trend

However, a premium valuation compared with the industry makes us apprehensive about BX’s prospects. Moreover, tighter credit markets of late, relatively high interest rates, uncertainties surrounding the trade policy, slower deal activity in private equity and real estate, reduced realizations, and concerns about exit opportunities are expected to hamper Blackstone’s near-term prospects.

Thus, for investors focused on long-term potential, Blackstone looks like an attractive investment option now. The company’s higher valuation reflects durable advantages and growth, not just investor enthusiasm. But, for valuation-aware and more conservative investors, it is advisable to maintain caution and look for any signs of slowing growth before making any investment decision. 

At present, BX carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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