New AI infrastructure company to use Google-designed chips
Alphabet’s (NASDAQ:GOOGL) Google and Blackstone Inc (NYSE:BX) announced plans on Tuesday to create a new artificial intelligence cloud computing company powered by Google’s proprietary AI chips, lifting shares of both companies in premarket U.S. trading.
In a joint statement, the companies said Blackstone will invest $5 billion in the venture and will hold a majority ownership stake.
The new company plans to bring 500 megawatts of computing capacity online by 2027, with ambitions to significantly expand capacity over time.
Venture expected to compete in fast-growing AI computing market
The project is expected to compete with AI infrastructure providers such as CoreWeave Inc (NASDAQ:CRWV), while also strengthening Google’s efforts to expand commercialization of its in-house AI processors, potentially increasing competition for NVIDIA Corporation (NASDAQ:NVDA).
The initiative comes as technology companies race to meet rapidly growing demand for computing power driven by artificial intelligence applications. Although Nvidia’s chips are widely viewed as the industry leader, soaring demand has encouraged many companies to explore alternative semiconductor suppliers.
Google last month introduced a new processor specifically designed for running AI models. Under the agreement, Google will provide the venture with its Tensor Processing Units chips, along with related software and cloud services.