Larry Fink from BlackRock foresees AI as a potential solution to the productivity crisis.

Larry Fink, the founder of BlackRock, has made a bold prediction about the potential of artificial intelligence to address the productivity crisis causing persistent inflation. Speaking at BlackRock’s investor day, Fink emphasized the significant role AI can play in increasing productivity and transforming profit margins across various sectors. He believes that AI could be the key technology in combating inflation. Fink has consistently warned about the possibility of high inflation leading to the US Federal Reserve raising interest rates later this year.

Intriguingly, Fink, who admits to being a fan of dystopian movies, expressed how BlackRock, a $9 trillion money manager, plans to approach investments in AI technology with both a “healthy paranoia” and “healthy enthusiasm.” Moreover, while BlackRock already holds the position of the world’s largest money manager, Fink stated that the company is actively seeking acquisitions to expand its global footprint, enhance its technology offerings, and strengthen its presence in private markets. He emphasized BlackRock’s willingness to disrupt itself and the industry as the foundation for their current success and future growth.

Notably, Fink and other executives did not address the criticism BlackRock has faced from “anti-woke” Republican politicians in the US, but they did reaffirm their commitment to the financial opportunities associated with investing in the energy transition.

The company outlined its target of achieving a 5% annual revenue increase, with a particular focus on leveraging its Aladdin technology business and expanding its relatively small but high-margin private markets business. BlackRock recently announced a partnership deal with Avaloq, a Swiss banking software provider owned by Japan’s NEC Corporation. Under this agreement, BlackRock will make a minority investment and integrate Avaloq’s technology into its Aladdin platform, catering to wealth managers.

Furthermore, BlackRock aims to take advantage of the trend where insurance companies, endowments, and pension funds are reducing the number of managers they work with and even outsourcing their entire portfolio to a single company. BlackRock has successfully secured 20 “mega-mandates” worth at least $5 billion since 2019.

BlackRock’s chief operating officer, Rob Goldstein, highlighted that clients are increasingly entrusting more responsibilities to the company. BlackRock also plans to double its revenue from private markets within five years, which currently stands at $1 billion. To achieve this, they recently restructured the leadership of private credit and multi-asset funds separate from traditional private equity. Currently, BlackRock manages $320 billion of alternative assets, including $156 billion in private markets, with the remaining in hedge funds and liquid credit investments.

Despite criticisms regarding BlackRock’s size and influence, the company’s executives argue that the asset management industry remains relatively fragmented. Mark Wiedman, the head of the global client business, emphasized that even with their current growth plans, BlackRock would only command 3.1% of the total market.