The internet’s mad scramble on Wednesday to patch a pair of critical vulnerabilities in PHP, a widely used web scripting language, was already too late to stop every attack, newly released details reveal.

Wednesday’s release of fixes for two critical vulnerabilities in PHP caused administrators and security staff to race to identify and patch vulnerable websites and apps, while attackers inevitably reverse engineered the fixes to learn how to exploit the flaws. Some governments and other groups even proactively took key websites down in anticipation of the release, so they wouldn’t be targeted before they could apply the patches.

But in addition to detecting such active exploitation on Wednesday, research published Wednesday evening by Amazon Web Services indicates that at least one actor had started attempting to exploit the bugs—known collectively as PHP2Shell—on October 17, four days before Wednesday’s public revelations.

AWS analysts spotted the October 17 exploitation on Wednesday while looking back at activity on one of their so-called honeypots, or intentionally vulnerable web servers or other digital lures that help researchers study attack methods and trends. The attempt came from an IP address that AWS says is linked to a “commercial anonymization network,” in other words a proxy network or VPN.

“While the vulnerability was under embargo, the targeting of a honeypot from an anonymized IP address suggests the activity was conducted by a threat actor, though it remains unclear how the actor acquired exploit information prior to disclosure,” CJ Moses, AWS’s chief information security officer, wrote in the research post.

Proof-of-concept exploits for PHP2Shell began emerging publicly on Wednesday, with some seeming to appear hours before the public disclosure at 10 am ET. In the hours leading up to the disclosure, AWS researchers say their honeypots were hit with multiple exploitation attempts anonymized using various providers and seemingly with various attack goals, likely indicating multiple different actors. “Technical analysis is ongoing, and it’s unclear if any of these attempts would have succeeded in real-world systems,” Moses wrote. He added that “PHP2Shell is now being broadly exploited in the wild.”

The PHP Foundation did not immediately respond to WIRED’s request for comment.

Though it is unclear how the exploitation on October 17 happened or where it came from, AWS emphasizes that the findings underscore how coordinated vulnerability disclosure must evolve and speed up, given global access to AI tools that can accelerate vulnerability analysis and allow less technically proficient actors to quickly develop new exploits.

“The time from patch to working exploit is shrinking for structural reasons,” Moses wrote. “In the past, most exploitation we observed came after a public proof of concept was released. A small number of capable actors built exploits, and everyone else waited for them. That dependency is weakening. AI-assisted analysis makes it cheaper to turn a patch diff or advisory into a working exploit. As a result, more actors can act within hours or even minutes once technical details of a vulnerability are disclosed.”

IEEE Life Fellow Manfred “Fred” J. Schindler has been elected as the 2027 IEEE president-elect. He will begin serving as president on 1 January 2028.

Schindler, who was nominated by the IEEE Board of Directors, received 16,421 votes in the election. Senior Member David Alan Koehler received 13,874 votes.

At press time, the results were unofficial until the IEEE Board of Directors accepts the IEEE Teller’s Committee report in November.

Schindler, an expert in microwave semiconductor technology, is an independent consultant supporting clients with technical expertise, due diligence, and project management.

Throughout his career, he led the development of microwave integrated-circuit technology, from lab demonstrations to high-volume commercial products. He has numerous technical publications and holds 11 patents.

Schindler served as CTO of Anlotek, and director of Qorvo and RFMD’s Boston design center. He was applications manager at IBM, engineering manager at ATN Microwave, and a lab manager at Raytheon.

An IEEE volunteer for more than 30 years, Schindler served as the 2024 vice president of IEEE Technical Activities and the 2021–2022 Division IV director. He was chair of the IEEE Conferences Committee from 2015 to 2018 and president of the IEEE Microwave Theory and Technology Society (MTTS) in 2003. He received the society’s 2018 Distinguished Service Award and its 2015 N. Walter Cox Award. His award-winning micro-business column has appeared in IEEE Microwave Magazine since 2011.

He also led the 2025 One IEEE to Enable Strategic Investments in Innovations and Public Imperative Activities adhoc committee.

Schindler is an IEEE–Eta Kappa Nu honorary life member and a MTTS honorary life member.

Bose Corporation has acquired Skullcandy, bringing the Utah-based headphone and lifestyle audio manufacturer into a growing portfolio that already includes McIntosh Laboratory and Sonus faber. Financial terms were not disclosed, but the October 21, 2026 announcement represents another significant step in CEO Lila Snyder’s transformation of Bose from a familiar consumer electronics brand into a much broader audio products and technology company.

For anyone still convinced that Bose only makes noise-cancelling headphones, soundbars, and expensive speakers for people who don’t understand high-end audio, it might be time to update that assessment. The Framingham-based company now owns two of the industry’s most respected luxury audio brands, important streaming and interactive-audio technology businesses, and a headphone manufacturer whose roots in skateboarding, snowboarding, and youth culture couldn’t be further removed from the traditional Bose customer.

The interesting part isn’t that Bose wants to sell more headphones. It already knows how to do that rather well. What Bose gains from Skullcandy is access to a different customer, a different culture, and a brand identity that would be extremely difficult to build from scratch.

And unlike some acquisitions where the buyer promises mysterious technological synergies and everyone hopes for the best, these two companies have already demonstrated that their partnership can produce actual products.

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Bose and Skullcandy Have Already Tested the Relationship

We’ve been following the growing relationship between the two companies at eCoustics, beginning with the Skullcandy Method 360 ANC wireless earbuds in 2025.

The Method 360 launched at $129.99, with a $99.99 introductory price, and incorporated Sound by Bose acoustic tuning and licensed earbud-fit technology. It was a meaningful development for Skullcandy because Bose’s engineering expertise offered a way to compete more seriously on sound quality and comfort without abandoning the brand’s affordable, lifestyle-oriented approach.

That collaboration expanded in July 2026 with the Crusher 1080 ANC headphones.

The $279.99 Crusher 1080 ANC combines Skullcandy’s adjustable sensory bass system with Bose QuietControl noise cancellation, TrueSpatial audio with head tracking, WaveForm audio processing, SpeechClarity technology, and Bose-developed sound tuning.

The division of responsibilities was revealing. Skullcandy retained its industrial design, software integration, and distinctive Crusher Bass experience, while Bose contributed technologies intended to improve the listening experience around those features.

That is a much more interesting partnership than taking an existing QuietComfort headphone, painting it orange, and sending it to a skateboard shop.

Today’s acquisition turns an established technology partnership into common ownership. The two brands have already spent time learning how their respective strengths fit together, which may reduce some of the uncertainty surrounding future product development.

Why Does Bose Want Skullcandy?

Bose’s premium headphones are built around noise cancellation, comfort, acoustic engineering, and increasingly sophisticated personalization. The company has spent decades earning consumer trust in those areas, but technical expertise alone doesn’t guarantee relevance among younger listeners.

Skullcandy has something different.

Founded in Park City, Utah, in 2003, the company developed its identity through boardsports, music, gaming, and lifestyle communities. Its colorful designs, accessible pricing, athlete relationships, and deliberately unconventional products appeal to buyers who may not consider Bose their first choice.

Those relationships aren’t easily replicated by hiring a marketing agency and producing another campaign featuring attractive people wearing headphones in an airport lounge.

In its announcement, Bose made clear that Skullcandy’s connection to these communities is central to the acquisition, and the company has no intention of eliminating the Skullcandy identity.

Skullcandy will remain a separate brand within Bose’s Premium Consumer Audio business and continue operating from Park City.

This is important because the two companies aren’t trying to sell identical products to the same customers. Skullcandy gives Bose another way to participate in the consumer audio market without requiring every product to carry the Bose name, design language, or pricing structure.

That also creates opportunities to reach consumers earlier in their audio-buying lives and potentially introduce them to other products within the wider Bose portfolio over time. Whether that translates into measurable customer loyalty or increased sales remains to be seen.

What Does Skullcandy Get Out of the Deal?

For Skullcandy, the advantages are more straightforward: access to Bose’s research, engineering expertise, global distribution, and commercial relationships, backed by a privately held company willing to invest in long-term product development.

Bose CEO Lila Snyder emphasized that the company has “the freedom to make bold, long-term investments,” an important distinction for a business that doesn’t answer to public-market shareholders every quarter.

Skullcandy CEO Brian Garofalow described the transaction as an opportunity to strengthen the products his customers already enjoy, explaining that “Joining Bose gives us the opportunity to make those experiences even better.”

The practical opportunity is to combine Skullcandy’s understanding of its audience with technologies that would otherwise require substantial independent research and development.

That could give Skullcandy access to more advanced noise cancellation, spatial processing, voice pickup, acoustic tuning, and other engineering resources while allowing its own teams to concentrate on product design and the features that distinguish the brand.

There is also a potential benefit in manufacturing scale, distribution, and retail relationships, although Bose has not disclosed specific plans to consolidate operations or change Skullcandy’s existing sales channels.

The important question for consumers is whether Skullcandy can deliver better-performing products without losing the accessible pricing and distinctive personality that made it successful.

A $100 pair of Skullcandy earbuds doesn’t need to become a $300 pair simply because the corporate parent knows how to make one.

From McIntosh to Skullcandy: Bose Is Building Something Much Bigger

We’ve been tracking this transformation at eCoustics since Bose’s November 2024 acquisition of McIntosh Group, which brought McIntosh Laboratory and Italian loudspeaker manufacturer Sonus faber under the same corporate roof.

At the time, some audiophiles worried that Bose would compromise the identities of two established luxury brands. Nearly two years later, McIntosh continues producing substantial American-made amplifiers and source components, while Sonus faber remains focused on premium loudspeakers and Italian craftsmanship.

That history provides useful context for today’s promise that Skullcandy will retain its independence as a brand.

Bose’s more recent acquisitions reveal another dimension to the strategy.

In June 2026, the company acquired StreamUnlimited Engineering, gaining expertise in network-audio software, connected-product platforms, streaming certification, and related infrastructure.

It followed that move with the acquisition of Firelight Technologies, developer of the FMOD interactive-audio platform used extensively in video games and other real-time applications.

As we explored in our recent editorial, What Is Bose Building?, these investments are not simply about adding more hardware brands. StreamUnlimited expands Bose’s role in connected audio. Firelight strengthens its position in interactive sound and gaming. McIntosh and Sonus faber provide established positions in luxury hi-fi, while Bose remains deeply involved in automotive audio and premium consumer products.

Skullcandy adds something those businesses don’t provide: a recognizable presence in a younger, more affordable, culturally driven segment of personal audio.

Bose is increasingly positioned to participate in how sound is developed, processed, distributed, and experienced, even when the product doesn’t carry a Bose logo. That’s a substantially different business strategy from competing solely with Sony, Apple, and Sennheiser for premium headphone sales.

Skullcandy’s Ownership History and the Undisclosed Price

Bose acquired Skullcandy from a fund managed by Mill Road Capital Management, the Connecticut-based private investment firm that took the company private a decade ago.

In August 2016, Skullcandy agreed to a merger with Mill Road in a transaction valued at approximately $196.6 million, according to Reuters. That agreement followed an earlier proposed acquisition by Incipio.

The 2016 figure provides historical context, but it tells us very little about what Bose paid in 2026. Neither company has disclosed Skullcandy’s current financial performance, the acquisition valuation, or the consideration paid.

Bose also hasn’t announced any restructuring, workforce reductions, product cancellations, or changes to Skullcandy’s management in connection with the transaction.

Those details matter when assessing the financial implications of the acquisition, and it would be premature to claim that Bose acquired the company at a bargain price or that the transaction will immediately improve profitability.

The Risks: Two Brands With Very Different Identities

The strategy makes considerable sense, but executing it successfully will require restraint.

Bose and Skullcandy are differentiated by more than pricing. They represent different philosophies about industrial design, marketing, features, and how consumers relate to music and technology.

The worst outcome would be for Skullcandy to become a less expensive Bose brand with interchangeable products and a slightly more colorful logo. That would undermine the very audience connection Bose is paying to acquire.

There’s also the question of overlap.

As Bose technology becomes more widely available inside Skullcandy products, the parent company will need to maintain meaningful distinctions between their respective product lines. Offering Bose-derived ANC and sound processing at lower prices can attract new customers, but it also requires careful decisions about features, performance, and positioning.

The existing Crusher 1080 ANC demonstrates one possible solution: use Bose technology to improve a product built around a distinctly Skullcandy experience rather than recreate a QuietComfort headphone at a discount.

The companies have not announced their next jointly developed product, and there is no confirmed roadmap for sharing additional technologies across the wider Bose portfolio.

The Bottom Line

The Skullcandy acquisition makes sense when viewed alongside everything Bose has done since acquiring McIntosh and Sonus faber in 2024.

Bose has spent years developing technologies that can improve the way people experience sound. What it increasingly recognizes is that those technologies don’t always need to be delivered through a product bearing its own name.

Skullcandy brings a distinct identity, established communities, and an audience that Bose has struggled to reach through its traditional product lineup. In return, Skullcandy gains access to engineering capabilities and resources that could make its products more competitive against Apple, Sony, JBL, and other established consumer audio companies.

The challenge will be preserving that identity while making full use of the new parent’s resources. Having more brands under one roof is not inherently an advantage if they eventually become difficult to distinguish from one another.

Bose has so far demonstrated a willingness to let McIntosh and Sonus faber remain themselves, and Skullcandy deserves the same opportunity. If the company can preserve what makes Skullcandy relevant while improving its engineering and expanding its reach, this could become one of Bose’s more consequential investments.

Twenty years ago, Skullcandy was born on a chairlift in Park City. Today, it belongs to the same company that owns McIntosh and Sonus faber. If you’d predicted that combination in 2003, somebody probably would have asked what you were smoking on the mountain.

But given Bose’s recent moves, perhaps we shouldn’t be surprised anymore.

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Measuring electric currents is an essential element of many electrical systems, but doing so in a way that is as nonintrusive as possible is not an easy problem to solve. Due to this we got a wide variety of current sensors to choose from for any given application, with [ElectrArc240] running us through these variants in a recent video.

The fairly low-tech, cheap and quite reliable method of using a shunt resistor is first demonstrated. This sees a lot of use in fairly low-voltage and low-current applications, with for example videocards using it to limit the amount of power the GPU can use, a feature that modders will happily bypass. Here simply the voltage drop across a known resistance value is measured, from which the current can be derived.

Of course, you got higher voltage and higher current applications too, as well as direct- and alternating current, with the latter especially allowing for easy current measurements simply from the electromagnetic field, or flux. Anyone who has used a clamp meter can attest to that such contact-free current sensing works, even for DC applications.

Beyond the basic transformer type you got many variants including Hall-Effect, TMR and fluxgate sensors, as well as the fiber-optic current sensor that uses an interferometer to measure the phase-change induced by the magnetic field – the Faraday effect – to the transmitted electromagnetic radiation. These more exotic types will improve resolution, at the cost of a rapidly increasing void in your project budget.

These various sensor types and their construction are demonstrated and discussed in the video, including when you’d want to use a specific type, and what the potential gotchas are with each type. Even if for many applications a simple shunt resistor suffices, it’s a good idea to know these different types, as well as their underlying theory of operation.

Netflix reported another enormously profitable quarter on October 20, with revenue reaching $12.87 billion and net income climbing to $3.66 billion. Wall Street wasn’t particularly impressed, and neither should subscribers be if the streaming giant continues raising prices without consistently delivering television and films worth staying home to watch.

We’ve covered Netflix’s 2026 price increases, its failed attempt to acquire Warner Bros. Discovery, and the increasingly expensive battle for streaming supremacy. But the latest earnings report exposes a problem that can’t be solved with another subscription tier, advertising initiative, or live sporting event. Netflix is generating more money while giving individual subscribers fewer reasons to spend their evenings watching it.

The company doesn’t have a financial crisis. It has a creative challenge, and the numbers are becoming difficult to ignore.

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Netflix’s Q2 and Q3 Financial Results Tell Two Different Stories

By conventional financial standards, Netflix is doing extremely well. Revenue increased sequentially in the third quarter, operating margins improved, and the company generated almost $2.9 billion in free cash flow.

Source: Netflix Q3 2026 Shareholder Letter.

The problem isn’t the absolute numbers but the direction of revenue growth. Netflix’s year-over-year growth rate has fallen from 17.6% in the fourth quarter of 2025 to 11.8% in Q3 2026, despite higher subscription prices and expanding advertising revenue.

Netflix also reduced its full-year advertising revenue forecast from approximately $3 billion to $2.7 billion, citing a slower-than-expected rollout of advertising technology. Management expects fourth-quarter revenue of approximately $13.44 billion, with weaker profit guidance reflecting, in part, costs associated with recently announced layoffs.

Investors have understandable concerns. But subscribers aren’t examining operating margins when they sit down on Friday night and spend 25 minutes scrolling through programming they have no desire to watch.

Netflix Subscribers Are Watching Less. That’s the Real Warning.

Research from investment firm Jefferies estimates that average monthly viewing time per Netflix member declined from approximately 66 hours during the first half of 2023 to 49 hours during the first half of 2026. That’s a reduction of almost 26%, and considerably more revealing than another quarterly earnings beat.

To be fair, Netflix reported more than 97 billion total viewing hours in the first half of 2026, up 2% year over year. The two figures aren’t contradictory: Netflix can attract more members globally while individual subscribers spend less time watching.

Netflix insists engagement remains healthy and says subscriber responses to its latest price increases have been consistent with expectations. The company also plans to reduce the frequency of its public engagement reports beginning in 2027, moving from twice-yearly reporting to annual updates.

Wonderful. When investors want more information about viewing habits, providing it less frequently is certainly one approach.

Netflix Needs Another Sopranos, Not Another Hundred Forgettable Originals

Remember when Stranger Things, Squid Game, and Ozark were the kinds of shows that made Netflix essential? People discussed episodes at work, argued about characters over dinner, and eagerly anticipated the next season.

The final season of Stranger Things attracted an enormous audience in late 2025, but it also demonstrated the difficulty of delivering a satisfying conclusion to a cultural phenomenon. Its final season currently holds an 83% critics’ rating on Rotten Tomatoes, compared with a substantially weaker 52% audience score.

Those ratings aren’t scientific measurements of everyone who watched the series, and the show’s commercial success is undeniable. But I found its conclusion disappointing, and clearly plenty of other viewers weren’t satisfied either.

Netflix needs another The Sopranos, Breaking Bad, The Americans, or Game of Thrones. Not necessarily another violent prestige drama, but original television with exceptional writing, complicated characters, genuine creative ambition, and enough cultural relevance to make people care about what happens next.

Netflix still produces major international hits and successful American releases. The question is whether it can deliver enough new, enduring franchises rather than depending on an endless rotation of disposable entertainment.

David Fincher and Netflix’s Creative Shake-Up

The departure of major creative talent should concern Netflix more than a disappointing advertising forecast.

According to October reporting from Page Six, David Fincher reportedly ended his Netflix overall deal following disagreements over budgets with former film chairman Dan Lin. That account has not been independently confirmed by Fincher or Netflix, and it doesn’t mean the filmmaker has abandoned the platform entirely.

Fincher’s upcoming The Further Mis-Adventures of Cliff Booth, starring Brad Pitt and written by Quentin Tarantino, remains part of Netflix’s fourth-quarter release slate. But losing a continuing arrangement with the director behind Se7en, Zodiac, The Social Network, and Mindhunter would hardly qualify as good news for a company desperate for distinctive original programming.

The wider leadership upheaval is equally revealing. Netflix is replacing content chief Bela Bajaria with former Disney and Fox executive Peter Rice, film chairman Dan Lin is departing, and approximately 1,000 employees are being laid off across several corporate divisions.

None of this proves that Netflix has lost its creative direction, but replacing senior executives while reducing staff suggests management knows something needs to change.

And while financial discipline matters, great films and television series rarely emerge from telling brilliant directors that the spreadsheet has final creative approval.

Paramount, HBO, and Warner Bros. Are Now a Much Bigger Threat

Netflix also faces a competitor that looks substantially different from the one it confronted six months ago.

As we reported in our extensive coverage of the Paramount and Warner Bros. Discovery merger, the transaction closed October 6, creating Skydance and bringing Warner Bros., HBO, Paramount Pictures, CBS, CNN, HBO Max, and Paramount+ under one corporate umbrella.

That’s an extraordinary collection of intellectual property and production experience, including the HBO television legacy that helped establish the modern prestige-drama era.

Netflix tried to acquire Warner’s studio and streaming assets but withdrew when Paramount’s competing offer became too expensive. Now it faces the combined company from the opposite side of the negotiating table.

For now, HBO Max and Paramount+ remain separate services, and Skydance faces its own enormous integration challenges. Combining two libraries doesn’t automatically create better original programming, particularly when billions in cost savings are part of the business plan.

But Netflix can no longer rely on being the largest streaming platform as its principal competitive advantage. With HBO’s creative legacy and Paramount’s substantial catalog under one roof, the competition for viewers’ time just became considerably more serious.

Has Netflix Become Too Focused on Pleasing Everyone?

There’s also a criticism that Netflix has become too concerned with political messaging, representation, and demographic targeting at the expense of storytelling. Some viewers describe that as the service becoming too woke, although there’s no reliable evidence establishing political themes as the principal cause of declining engagement.

The real issue is more fundamental. Audiences can appreciate diverse characters, difficult subjects, and challenging social commentary when they’re integrated into compelling stories. What becomes exhausting is writing that feels assembled by committee, where characters exist to deliver messages rather than behave like believable human beings.

Netflix needs to give creative talent room to take risks, develop complicated characters, and occasionally produce something that makes viewers uncomfortable for the right reasons.

Great television doesn’t need to agree with everyone. It needs to be worth watching.

Netflix Is Spending $1 Billion Down the Road From My House

Which brings us to Fort Monmouth, New Jersey.

Netflix is investing approximately $1 billion in transforming the former military installation in Eatontown and Oceanport into a major East Coast production campus. The development encompasses more than 292 acres, with 12 planned soundstages totaling nearly 500,000 square feet.

Construction is already well underway, and Netflix celebrated a major structural milestone in June. The first construction phase is scheduled for completion in summer 2027, with another phase following in fall 2028.

As someone who lives on the Jersey Shore, I’m not about to complain about Netflix investing a billion dollars into my neighborhood. The jobs, local economic activity, and potential benefits for nearby property values are all welcome. If the development makes my house more valuable, you certainly won’t find me picketing the construction entrance.

But there’s an important distinction between building an extraordinary production facility and producing extraordinary entertainment.

You can construct twelve state-of-the-art soundstages, employ thousands of talented people, and install enough technology to make a Hollywood executive weep with joy. None of that guarantees the next Breaking Bad.

It’s like building the finest restaurant kitchen in New Jersey and discovering that nobody hired a chef who knows how to cook.

Netflix Needs Better Stories, Not Just Better Margins

Netflix remains an enormously successful company, and its global reach, technology, and financial resources give it considerable advantages. But those strengths won’t automatically convince viewers to keep paying more for a service that increasingly competes with YouTube, social media, live sports, and a newly consolidated entertainment giant.

Peter Rice’s challenge isn’t simply producing more programming or lowering costs. It’s restoring the kind of creative ambition that gave Netflix its reputation in the first place, and making the service feel indispensable rather than merely familiar.

The company should invest in exceptional writers and filmmakers, support more ambitious original series, and resist the temptation to treat every creative decision as an exercise in demographic optimization. It also needs to make discovering worthwhile programming easier instead of burying it beneath an endless collection of algorithmically recommended distractions.

I want Netflix’s Fort Monmouth project to succeed. I want those soundstages filled with talented crews making films and television that people will still be discussing twenty years from now. Especially one that I wrote.

But the company needs to remember something fundamental: Nobody subscribes to Netflix because its operating margins are impressive. They subscribe because they want something worth watching.

And right now, Netflix could use a few more reasons to keep the television on.

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Private equity giant Blackstone is putting itself at the center of the AI boom, firm veteran Jas Khaira discussed last week on stage at TechCrunch Disrupt.

It is writing checks via various strategies, ranging from offering massive loans to data centers to investing in frontier AI models and applications.

Earlier this year, the firm launched Blackstone N1 (BXN1), a San Francisco-based central hub for its AI initiatives. The group is led by Khaira, who relocated from New York to be at the epicenter of AI.

Unlike earlier tech cycles such as mobile or SaaS, which allowed companies to reach significant scale with moderate capital, the transition to AI requires staggering amounts of investment. That need for capital is precisely why Blackstone, with its $1.3 trillion in assets under management, could play such a critical role in this tech shift.

Khaira emphasized that Blackstone sets itself apart from traditional venture capitalists through its focus on compute financing and its ability to offer flexible capital structures, ranging from debt to equity. And it has been investing aggressively.

“We’re the largest owner of compute outside of the hyperscalers today, whether it’s investments in neo clouds, investments in data centers, and being able to use that compute strategically to support companies,” Khaira said.

For instance, BXN1 played a key role in several compute-related deals, among them Crux AI, a neocloud launched in partnership with Google to commercialize its custom TPUs, to which Blackstone committed $5 billion as an investor. It also backed four-year-old Etched, a chip startup whose rapid development has caught investor attention. Neoclouds are cloud providers that rent out AI GPU infrastructure.

Blackstone pioneered a financing structure that allowed it to lend massive sums to venture-backed cloud neoclouds by analyzing both committed customer contracts and using GPUs pledged as collateral.

Blackstone’s first such deal came in 2023 with CoreWeave, shortly after that neocloud saw demand explode following the launch of ChatGPT. Despite having only “30 million of revenue and minimal profitability” at that time, according to Khaira, CoreWeave approached Blackstone for a $2.3 billion loan.

CoreWeave was borrowing against the considerable value of its large collection of Nvidia GPUs, with Nvidia also an investor. Blackstone also grew more comfortable with the loan because CoreWeave had contracts with blue-chip customers like Microsoft.

That transaction quickly became the financing model for how Blackstone and other credit institutions provided billions in follow-on debt to CoreWeave and rival neoclouds.

“One of the primary things that we’re looking to is the nature of the customer. And if the customer is an investment-grade customer — let’s say it’s Microsoft or let’s say it’s Meta — the risk gets priced relative to that customer,” Khaira said.

Building on its success with CoreWeave, Blackstone struck other neocloud financing deals, including co-leading alongside Coatue a $10 billion credit facility for Australian GPU provider Firmus earlier this year.

Khaira acknowledged that in recent weeks, the large debt burdens accumulated by these companies and other neocloud operators have begun to raise red flags. Coreweave’s debt alone has since ballooned to about $50 billion, causing Altimeter Capital founder Brad Gerstner to note in a recent CNBC interview, “The collateral that CoreWeave is putting up which is really only GPUs is not good enough anymore. They used that in the past to get cheap debt.”

Khaira said that on the credit side, the market jitters stem from a combination of factors. Interest rates ticked up in September, and hotter-than-expected inflation signals that borrowing costs may keep climbing. The flood of AI infrastructure debt offerings isn’t helping either.

“We’re also seeing higher credit spreads,” Khaira said, explaining that lenders are charging higher premiums on top of already higher base interest rates to finance the AI buildout. “The cost of capital to price in debt for a Meta or a Microsoft has widened out,” he added, pointing out that even tech giants with massive balance sheets and solid earnings are paying more to borrow.

Concerns about the rising cost of debt have spilled into the stock market. Shares of CoreWeave dropped over 20% in recent days, while Firmus scrapped its planned IPO on the Australian Securities Exchange at a target valuation of roughly $30 billion.

“Ultimately, the market wasn’t there at that valuation, and so I think as a result, that deal didn’t get done,” Khaira said about Firmus’ cancelled listing.

“The market is thinking what is the right price for neoclouds, what is the right price for these businesses in this moment when interest rates are moving up,” he said.

Despite those pressures on some infrastructure providers, AI companies simply can’t get enough compute to power their models. Their appetite continues to drive data center buildout.

Khaira downplayed worries of doom-mongers that the massive accumulation of AI infrastructure debt could lead to a widespread credit crisis, or worse, crash the economy altogether. “This doesn’t feel like something where you’ve got 2008 banks that are shaky credits,” he said.

Instead, he pointed out that because the vast majority of data centers are built for hyperscalers, the debt financing them is ultimately backed “by the most creditworthy companies in the world.”

Beyond funding data centers, Blackstone is helping companies adopt AI through a $1.5 billion joint venture called “Ode with Anthropic,” formed alongside Anthropic and Hellman & Friedman this year. Ode supplies forward-deployed engineers to help companies adopt AI and integrate it into their operations, starting with Blackstone’s 280 portfolio companies.

When asked if Blackstone-owned companies are seeing tangible gains from AI, Khaira conceded that “there is definitely ROI, but it is uneven.” He described technology adoption as something that could move in a “sawtooth-type pattern,” which, to skeptics, can look like an oversupply of compute before adoption catches up.