BlackRock and Microsoft are planning a $30 billion fund to invest in AI infrastructure

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BlackRock is preparing to launch a more than $30 billion artificial intelligence investment fund with tech giant Microsoft to build data centers and energy projects to meet growing demands stemming from AI, people briefed on the matter said. problem.

The fund, which BlackRock is launching with its new infrastructure investment unit Global Infrastructure Partners, would be one of the largest investment vehicles ever raised on Wall Street. Microsoft and MGX, the Abu Dhabi-backed investment company, are general partners of the fund. Nvidia, the fast-growing chipmaker, provided expertise, the people said.

The investment vehicle aims to address the staggering power and digital infrastructure requirements for building AI products, which are expected to face severe capacity bottlenecks in the coming years, according to people briefed on the matter. AI computing power requires far more energy than previous technological innovations and has strained existing energy infrastructure.

The fund would mark GIP’s first major fund since the private infrastructure investment group agreed to be acquired by BlackRock for $12.5 billion earlier this year. The deal is due to close in October.

BlackRock, the world’s largest money manager, has singled out the energy sector as one of its top growth opportunities. Chief executive Larry Fink wrote to investors earlier this year that “in my nearly 50 years in finance, I have never seen more demand for energy infrastructure.”

The soon-to-be-launched fund is the latest vehicle created by a major asset manager to meet the ever-growing demand for energy to power generative AI and cloud computing. Earlier this year, Microsoft agreed to back $10 billion in renewable electricity projects built by Canada’s Brookfield Asset Management. Microsoft has committed to ensuring that 100% of its energy consumption is matched with zero-carbon energy purchases by 2030.

“The country and the world will need more capital investment to accelerate the development of the necessary AI infrastructure. This kind of effort is an important step,” said Brad Smith, president of Microsoft.

In 2017, Blackstone announced plans for a $40 billion infrastructure vehicle with backing from Saudi Arabia, and Brookfield last year raised $28 billion for what was described as the largest infrastructure fund ever .

The International Energy Agency estimates that global electricity consumption by data centers could top 1,000 terawatt-hours by 2026, more than twice the amount used in 2022.

In the U.S., home to a third of the world’s data centers, electricity demand is growing rapidly for the first time in two decades, driven in part by these power-hungry facilities. A report from Grid Strategies indicates that five-year forecasts for US electricity demand growth have nearly doubled over the past year, rising from 2.6% to 4.7%.

Nvidia and MGX did not immediately respond to requests for comment. BlackRock declined to comment.