BLK: Data Center Acquisitions Will Drive Expansion in AI Infrastructure Markets

Analysts have increased their price target for BlackRock, raising it from approximately $1,300 to $1,334. They cite strong Q3 results, robust inflows, improved earnings estimates, and confidence in the firm's long-term growth opportunities.

Analyst Commentary

Recent Street research highlights a strong consensus among analysts regarding BlackRock's favorable outlook. Several firms have raised their price targets and underscored the company's robust Q3 performance, ongoing strategic initiatives, and sector leadership. Below, key bullish and bearish perspectives are summarized.

• Bullish analysts are raising price targets, citing solid Q3 results, significant net inflows, and successful execution of strategic acquisitions. These moves have enhanced fee revenue and asset growth.
• BlackRock's control of power assets and participation in landmark deals, such as the acquisition of Aligned Data Centers, are viewed as strengthening its position within the rapidly growing AI and infrastructure sector. This is seen as potentially benefiting the entire industry and affirming the value in companies with extensive power portfolios.
• Upgrades to consensus long-term organic growth assumptions and forward guidance on key performance metrics point to strong visibility into sustainable earnings power. These factors also contribute to expectations of widening valuation multiples for BlackRock compared to peers.
• Bullish analysts emphasize the firm’s diversified product offering, particularly strong performance in ETFs, private markets, and global equities. These areas are driving robust asset inflows and supporting premium valuation levels.

• Bearish analysts note that while BlackRock continues to deliver strong execution, the broader sector may face challenges from rapid changes in market demand for power, land, and critical supply components. This could lead to future constraints on expansion.
• Some voices highlight the risk of occasional disruptions or "hiccups" in long-term growth from competitive pressures, integration of acquisitions, or volatility across global markets.
• There are concerns that future outperformance depends on maintaining strong momentum in both traditional and alternative asset management. This performance could be tested during periods of heightened market uncertainty or regulatory changes.

What's in the News

• BlackRock, along with other private credit lenders, is seeking to recover more than $500 million, alleging fraud by Bankim Brahmbhatt and fabrication of loan collateral accounts receivable (Wall Street Journal).
• BlackRock is part of an investment consortium, including Nvidia and Microsoft, that has agreed to acquire Aligned Data Centers in a $40 billion deal. This marks one of the industry’s largest acquisitions (Financial Times).
• BlackRock ETFs participated as some of the largest investors in a $3 billion Hyperion bond deal, supporting a major data center operation backed by Blue Owl Capital and Meta (Wall Street Journal).
• BlackRock announced a strategic update to its Select Treasury Based Liquidity Fund, enhancing liquidity, introducing new assets, and supporting stablecoin distribution channels as digital assets evolve (Company announcement).
• Deutsche Bank increased its price target for BlackRock to $1,320, citing strong Q3 results and the firm’s multiple avenues for future organic growth (Deutsche Bank).

Valuation Changes

• Fair Value: Increased from $1,299.50 to $1,334.47. This reflects a modest upward revision in analysts' valuation models.
• Discount Rate: Edged slightly higher, moving from 8.25% to 8.26%. This indicates a minor adjustment to perceived risk.
• Revenue Growth: Improved marginally from 11.02% to 11.11%. This suggests slightly stronger growth expectations.
• Net Profit Margin: Declined fractionally from 31.68% to 31.62%. This signals a small decrease in projected profitability.
• Future P/E: Rose modestly from 25.75x to 26.44x. This points to higher forward valuation multiples.