BlackRock and Microsoft team up for $30 billion AI infrastructure fund

As I’ve written for most of the past year, the next AI trade continues to look like it’s going to be energy. And now, both BlackRock and Microsoft are making it known that they understand this too.

Yesterday it was reported that the two industry giants are preparing to launch a $30 billion AI investment fund that will see Microsoft build data centers and energy projects to meet the demands of AI. according to the Financial Times.

BlackRock’s new infrastructure investment unit, Global Infrastructure Partners, is launching a major investment fund with Microsoft and Abu Dhabi’s MGX as general partners. Nvidia will provide consultancy on the design and integration of the factory.

The FT wrote that the partnership aims to address the massive energy and infrastructure needs of AI development, which are expected to strain current energy systems. The computational requirements of AI far exceed previous technologies.

The partnership is looking to raise up to $30 billion in equity, with plans to raise an additional $70 billion in debt.

In a statement, Larry Fink said, “Harnessing private capital to build AI infrastructure, such as data centers and power, will unlock a multi-trillion dollar long-term investment opportunity.”

Brad Smith, president of Microsoft, added: “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.”

Nvidia’s Jensen Huang added: “Accelerated computing and generative AI are driving a growing need for AI infrastructure for the next industrial revolution.”

The upcoming fund is the latest by a major asset manager to address the growing power needs of generative AI and cloud computing. Earlier this year, Microsoft committed $10 billion to renewable energy projects with Brookfield Asset Management and aims to achieve 100% zero-carbon energy by 2030, The Financial Times concluded.

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

In the US, home to a third of the world’s data centers, electricity demand is increasing for the first time in 20 years. A report from Grid Strategies shows that five-year US electricity demand projections have nearly doubled, from 2.6% to 4.7%.

For those who missed it, in our note “The Next AI Trade“since April this year, we have outlined various investment opportunities for fueling America, most of which dramatically outperformed the market.

A favorite name of ours was Sam Altman-backed Oklo, which we highlighted as a potential solution to future extreme energy demands due to artificial intelligence. It makes nuclear power plants, from 15 MWe to 50 MWe, using liquid metal reactor technology, in small modular reactors that will soon be everywhere.

By Zerohedge.com

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