Artificial intelligence has become one of the biggest drivers of U.S. economic growth, as tech companies pour record sums into the data centers that power AI tools. Larry Fink, chairman and C
Artificial intelligence has become one of the biggest drivers of U.S. economic growth, as tech companies pour record sums into the data centers that power AI tools.
Larry Fink, chairman and CEO of BlackRock, says stopping that buildout would come at a steep price.
BlackRock is an asset manager, a firm that invests money for pension funds, governments and everyday savers. It oversees $15.5 trillion.
Speaking to CNBC’s Jim Cramer on Oct. 14, Fink said a moratorium on data centers would push the U.S. into a recession. A moratorium is a nationwide pause on building them.
Fink’s reasoning is that so much of the economy now depends on that investment. He also dismissed most fears about data centers as “misinformation.”
U.S. Senator Bernie Sanders, at the United Center in Chicago, Illinois, on August 20, 2024.Photo by CHARLY TRIBALLEAU/AFP via Getty Images
Fink's reasoning comes from observing what is unfolding with Congress. On June 24, Rep. Alexandria Ocasio-Cortez introduced the House version of the AI Data Center Moratorium Act, with Sen. Bernie Sanders leading the Senate companion bill.
The bill would immediately halt construction of new data centers and the expansion of existing ones.
The pause has no fixed end date. It would stay in place until Congress passes comprehensive AI legislation or “strong national safeguards are in place."
Those safeguards include making sure AI doesn’t raise electricity prices or harm communities and the environment.
”Congress has a moral obligation to stand with the American people and stop the expansion of these data centers,” Ocasio-Cortez said in the release.
The bill is still in early committee review. Fink did not name it.
Data centers are huge warehouses packed with servers.
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Fink tied the warning to a broader concern: money is getting tighter.
On BlackRock’s earnings call, he said that for the first time in his 50-year career he is seeing “genuine shortages of capital.”
Governments are running large deficits while private demand for funding keeps climbing.
US Vice President JD Vance addresses $40 trillion debt (1:55)Washington is a big part of that squeeze.
”Our U.S. deficits, which we don’t talk enough about, is starting to have some serious impact,” he told Cramer.
U.S. national debt passed $40 trillion on Aug. 19, according to Treasury data. To cover it, the government borrows by selling bonds at regular auctions.
“Our government is demanding more and more credit,” Fink told Cramer. “The bond auctions are getting larger and larger and larger.”
The firm’s own results show how much money is looking for a home.
BlackRock’s assets under management rose 15% from a year earlier to $15.5 trillion at the end of September.
Clients added $205 billion in net new money. Revenue rose 19% to $7.75 billion, and adjusted earnings per share jumped 38% to $15.93.
Fink says the demand reaches well beyond the AI boom.
”I know everything related to AI and data centers is sexy and appealing and we want to talk about it,” he said. “But more and more organizations are coming to the capital market.”
Fink’s answer is to unlock more private capital rather than slow the AI buildout. He says the U.S. needs that money to grow the economy by 3%.
He pointed to mortgage-backed securities as proof it can work. He helped create that market, and he says it has grown from a few billion dollars to $15 trillion.
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