Blackstone Bets $5B On AI Cloud Venture With Google

Google and Blackstone are partnering to launch a new AI-focused cloud provider.

The yet-to-be-named AI cloud firm would provide on-demand access to computing power from Google’s proprietary artificial intelligence chips, known as Tensor Processing Units, The Wall Street Journal first reported Monday.

The partnership marks the entry of two of the largest digital infrastructure players into the fast-growing “neocloud” segment dominated by newer firms like CoreWeave.  

Longtime Google executive Benjamin Treynor Sloss has been appointed CEO of the new venture, which is launching with $5B in equity capital provided by Blackstone. Blackstone will be the majority owner in the partnership, and its investment is expected to be leveraged to deploy roughly $25B toward new computing power, according to the WSJ.

The new firm plans to initially deploy 500 megawatts of capacity by the end of 2027, Blackstone announced, with computing power continuing to scale up in the following months. Specific existing and under-development data centers have reportedly been identified as the locations for these deployments. 

In launching a firm focused on AI-specific cloud services, Google and Blackstone are looking to compete in a neocloud landscape that, while the fastest-growing segment of the cloud market, has been dominated by startups.

CoreWeave, now a public company, is by far the sector’s most prominent player. But the neocloud ecosystem has more than 190 smaller operators, according to JLL. Those include fast-growing firms like Crusoe, Nebius, Core Scientific, Nscale and Lambda.

These firms have carved out a niche in the cloud ecosystem by offering access to the high-performance chips needed for AI — demand that the major hyperscalers, including Google, haven’t been able to meet on their own. Neoclouds have proven to be competitive with larger cloud providers due to their faster speed to market and better pricing for many customers.

Beyond expanding into this new cloud submarket, the new venture will boost Google’s efforts to compete with chipmaking behemoth Nvidia in the market for the processors powering the AI revolution. Although Nvidia’s GPUs dominate the market, Google has made a push in recent months to commercialize its TPUs, which it previously used only in its own data centers. 

Last fall, Google signed major computing deals with Anthropic and Meta that gave the AI-model makers access to these chips. But Google’s leadership said on the firm’s latest earnings call that it would further accelerate efforts to expand its chip business in the months ahead, particularly to meet growing demand for AI inference computing. 

For Blackstone, the Google partnership expands the firm’s vast footprint across the digital infrastructure ecosystem. The investment giant calls itself the largest data center operator in the world, with a portfolio established largely through the acquisitions of developer and operator QTS in 2021 and AirTrunk in 2024. 

Last month, Blackstone centralized its AI and digital infrastructure bets into an entity called Blackstone N1. Prior to the partnership with Google, the division established a $1.5B JV with Anthropic earlier this month.