Alphabet’s (GOOGL) Google and alternative asset manager Blackstone (BX) announced a joint venture to create a new artificial intelligence (AI) cloud company that will offer data center capacity and access to Google’s Tensor Processing Units (TPUs) as a compute-as-a-service offering. The news comes amid massive demand for computing power to train and run advanced AI models. Backed by Google’s specialized chips, the new AI cloud company will compete with neocloud providers CoreWeave (CRWV) and Nebius (NBIS).
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Explore CWVX for 2X leverage on CRWVThe new AI cloud company will give customers another option for accessing TPUs, in addition to Google Cloud.
More on Google and Blackstone-Backed AI Cloud Company
Under the deal between the two companies, Blackstone is making an initial $5 billion equity investment to bring an expected 500 megawatts (MW) of capacity online in 2027, with plans to expand massively over time. Blackstone will be the majority owner in the new company. According to a Bloomberg report, the total investment could reach $25 billion, including leverage. It is worth noting that Blackstone, one of the leading alternative asset managers, touts itself as the largest global provider of data centers.
Meanwhile, Google will supply hardware, including TPUs, as well as software and services, to help the new AI cloud company grow rapidly to meet the growing demand for accelerated computing. Blackstone has named Benjamin Treynor Sloss, a Google executive, as the CEO of the new company. Sloss has more than two decades of experience in developing and operating Google’s global infrastructure and operations.
This new venture will enable Google to monetize its TPUs, amping up competition with Nvidia (NVDA), which dominates the AI chips market. Previously, Google announced a deal with AI startup Anthropic to provide access to up to one million TPUs. It has also struck a multi-billion-dollar deal with Meta Platforms (META) to lease its advanced TPUs to develop new AI models.
Rising demand for AI infrastructure is driving massive investments. Big Tech, including Microsoft (MSFT), Alphabet, Meta Platforms, and Amazon (AMZN), are expected to spend more than $700 billion on AI infrastructure this year.
Wall Street’s Take on Google, Blackstone Stocks
Currently, Wall Street has a Strong Buy consensus rating on Alphabet stock, with the average GOOGL stock price target of $426.44 indicating 7.4% upside potential. GOOGL stock has risen 27% year-to-date, driven by demand for Google Cloud, integration of AI across the company’s offerings, and rising adoption of TPUs.
Meanwhile, Blackstone earns a Moderate Buy consensus rating, with the average BX stock price target of $144.92 implying 24% upside potential. BX stock is down 24% so far this year amid concerns regarding private credit and a slowdown in revenue growth.
