Google (GOOG, GOOGL) and Blackstone (BX) are launching artificial intelligence cloud companies, the latest sign that Wall Street is getting deeper into the AI infrastructure race.
The joint venture will provide data center capacity, operations, networking, and Google Cloud Tensor Processing Units (TPUs) as compute-as-a-service services.
The business will give customers another way to access Google’s TPUs, in a similar way to cloud provider CoreWeave (CRWV).
Blackstone announced an initial $5 billion equity investment through its own funds. The company expects its first 500 megawatts of power to be operational by 2027. Blackstone will become a major shareholder, according to people familiar with the deal, although exact numbers were not disclosed.
This announcement is a big signal that the hard assets that support AI’s computing needs are becoming very attractive investments for finance.
As of their first quarter results, major tech companies expect to spend more than $700 billion in capital spending to build AI this year. But that’s still not enough. Private asset manager Ares said in April that the opportunity in third-party data centers alone is estimated to be worth $900 billion.
For Blackstone, the deal marks its latest commitment to AI infrastructure. In late April, Blackstone announced the creation of a new West Coast division focused on investing in AI and other rapidly emerging technologies.
Blackstone already owns QTS, a leading North American data center company, through its real estate and infrastructure equity funds. The company also holds significant stakes in AI companies such as Anthropic (ANTH.PVT), OpenAI (OPAI.PVT), and SpaceX (SPAX.PVT), which owns xAI.
CEO Stephen Schwarzman said last month that he believes his company is “the world’s largest investor in AI-related infrastructure.”
Google already has a number of deals in place to help businesses take advantage of TPUs. META has reportedly signed a multi-year, multi-billion dollar deal to access the chip, according to The Information. Anthropic has also signed on to use Google’s processors.
The Blackstone deal also highlights increased competition between Nvidia and hyperscaler customers like Google and Amazon (AMZN). Like Google, Amazon also offers custom Trainium chips for rent through AWS services.
In the company’s latest earnings call, CEO Andy Jassy noted that Amazon’s chip business grew 40% quarter-over-quarter, with annual sales exceeding $20 billion.
Jassy said if the chip division were an independent business selling processors to AWS and third-party customers, the run rate would be $50 billion.
