Google, Blackstone to create AI cloud firm with in-house chips

Alphabet’s Google has partnered with Blackstone to create a new AI cloud business, leveraging $25 billion in capital—including $5 billion in equity—to compete in the growing AI infrastructure market. Blackstone, which will hold majority ownership, plans to deploy 500 megawatts of computing capacity by 2027, primarily using Google’s custom-designed tensor processing units (TPUs) for AI workloads. The venture will be led by Google executive Benjamin Treynor Sloss as CEO, aiming to serve both internal and external AI demand. The move follows Blackstone’s recent $1.75 billion IPO for its digital infrastructure trust, which acquires existing data centers benefiting from AI growth. Google’s cloud computing division has already seen surging sales, and its AI services are gaining traction among consumers. The new business will challenge neocloud providers like CoreWeave and Nebius Group, which rely on Nvidia’s GPUs. Blackstone, with over $1.3 trillion in assets under management, positions itself as the largest global data center provider, having acquired QTS in 2021 and AirTrunk in 2024. The partnership underscores the escalating investment in AI infrastructure, as companies race to meet rising demand for computing power. Google’s TPUs, designed for AI model development, will form the backbone of the new venture’s operations. The collaboration highlights the competitive shift in AI cloud services, where specialized hardware and scalable data centers are critical. With AI spending booming, the venture aims to capitalize on Google’s existing cloud strengths while expanding its hardware and capacity to support future growth.