Blackstone, Alphabet $5 billion AI push

Blackstone and Google said on May 18 they are creating a new U.S.-based company to sell AI computing capacity built around Google’s Tensor Processing Units, or TPUs. Blackstone said it will commit an initial $5 billion in equity to the venture, while Google will provide the chips, software and services. (blackstone.com) The companies said the first 500 megawatts of capacity are expected to come online in 2027. They did not name project sites, customers or financial terms beyond Blackstone’s initial equity commitment. The announcement adds a concrete operating plan to a broader rush by technology companies and infrastructure investors to secure power, land and chips for AI workloads. Alphabet said on its April 29 earnings call that first-quarter capital expenditures were $35.7 billion, with the overwhelming majority directed to technical infrastructure supporting AI opportunities across the company. (blackstone.com) Blackstone said in its release that it is the world’s largest private owner of data centers and manages more than $1.3 trillion in assets. ### So what exactly are Blackstone and Google building? The new company will offer data center capacity, operations, networking and Google Cloud TPUs as a compute-as-a-service product, according to Blackstone’s May 18 release. (blackstone.com) That means customers will be able to access cloud TPUs outside the standard Google Cloud channel, the companies said. Google said its TPUs are custom chips built for AI training and inference and have been used in production for more than a decade. Blackstone said the joint venture is intended to give customers “another option” for accessing those chips as demand for accelerated computing rises. (abc.xyz) ### Where does the $5 billion go? Blackstone said the $5 billion is an initial equity commitment from funds it manages. The company tied that capital to a plan to bring the first 500 megawatts of capacity online in 2027 and said the platform could scale “significantly over time.” CNBC, citing Blackstone’s statement, reported that the venture is U.S.-based and aimed at building out AI infrastructure using Google’s TPU chips. (blackstone.com) CNBC also reported, citing the Wall Street Journal, that Blackstone is expected to hold a majority stake, though Blackstone did not disclose the ownership structure in its own release. ### Why are TPUs at the center of this deal? (blackstone.com) Google Cloud CEO Thomas Kurian said in Blackstone’s release that the partnership is meant to meet growing demand for TPUs, which he said are optimized for efficiency and performance in the AI era. Blackstone President Jon Gray said the venture is aimed at meeting what he called “unprecedented demand for compute.” (blackstone.com) Alphabet has been signaling that infrastructure demand is rising inside its cloud business. On the company’s April 29 earnings call, CEO Sundar Pichai said Google Cloud revenue grew 63% and backlog nearly doubled quarter on quarter to more than $460 billion, driven by demand for AI products and infrastructure. (cnbc.com) ### Who will run the new company? Blackstone said Benjamin Treynor Sloss, a Google executive who has spent more than two decades building and operating Google’s global infrastructure and operations, will serve as chief executive of the new company. CNBC described him as Google’s most recent chief programs officer. (blackstone.com) Jas Khaira, head of Blackstone N1, said in the release that Google’s TPUs are “foundational to the AI economy” and fit the type of platform Blackstone’s growth vehicle was created to back. The companies did not say whether Google would retain a direct management role beyond supplying hardware, software and services. (abc.xyz) ### What still has not been disclosed? Blackstone’s May 18 statement did not identify data center locations, named customers, partner hyperscalers or a full project cost beyond the initial equity check. CNBC reported that the Wall Street Journal said likely sites had been identified, including some already under construction, but those details were not confirmed in Blackstone’s release. (blackstone.com) The next dated milestone the companies have provided is 2027, when the first 500 megawatts of capacity are expected to come online in the United States. Google’s May 19 blog post and Blackstone’s May 18 release both point to that target as the first operating benchmark for the venture. (blackstone.com)