Blackstone to invest $5 billion in AI infrastructure venture with Google, powered by TPU chips

The Google Cloud logo is displayed on a high-definition digital monolith at the entrance of the Google pavilion during the Mobile World Congress in Barcelona, Spain, on March 5, 2026. For the 2026 edition, Google Cloud showcases its developments in the ''IQ Era'' by unveiling new Agentic AI solutions for telecommunications, powered by the Gemini 3.1 Pro model and Vertex AI Agent Builder. The exhibit highlights the deployment of Google Distributed Cloud running on TPU v6 (Tensor Processing Units) to enable AI at the network edge. Key demonstrations include the ''Network Digital Twin'' powered by Spanner Graph and BigQuery, which allows operators like MasOrange and Deutsche Telekom to use autonomous agents for real-time root-cause analysis and predictive network self-healing. The stand emphasizes Google's unified data foundation, utilizing Graph Neural Networks to transition from traditional monitoring to proactive, intent-based network management. (Photo by Joan Cros/NurPhoto via Getty Images)

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Blackstone, the world's largest private owner of data centers, will invest $5 billion in equity capital in a new artificial intelligence infrastructure company with Google, the New York-based asset management firm announced Monday.

Google will supply the new U.S.-based company with its tensor processing units — chips purpose-built for processing artificial intelligence computations — bringing the first 500 megawatts of compute capacity online by 2027, with "plans to scale significantly over time," Blackstone said in a statement.

"This new company has enormous potential as it helps to meet the unprecedented demand for compute," Jon Gray, President and COO of Blackstone, said in the statement.

The unnamed company will be helmed by Benjamin Treynor Sloss, who most recently served as Google's chief programs officer. A Google spokesperson declined to comment on whether Google would retain a direct leadership role in it.

The Wall Street Journal, which first reported on the joint venture before Blackstone's official statement, said the private equity giant would hold a majority stake, citing sources familiar with the matter.

Blackstone did not disclose the venture's ownership structure in its statement, and did not respond to CNBC's request for comment by publication time.

The Journal also reported that the joint venture has already identified likely data center locations, some of which are under construction.

Blackstone, which manages more than $1.3 trillion in assets, has invested aggressively across the AI ecosystem and, earlier this month, established a similar venture with Anthropic.

Shares of Alphabet and Blackstone rose by about 1% in pre-market trading on Tuesday.

The deal underscores the growing rivalry between Google and Nvidia in AI hardware. Google's TPUs have long been seen as the company's answer to industry leader Nvidia's graphics processing units.

While Google continues to use Nvidia's GPUs across its cloud architecture, the company has sought to reduce its reliance on Jensen Huang's Nvidia by developing its proprietary TPUs.

Other tech giants such as Amazon Web Services have similarly sought to develop their own semiconductor chips. Google was an early proponent of in-house hardware production, manufacturing its first TPU in 2015.

Unlike GPUs, which are broadly suited for general usage, Google touts its TPUs as purpose-built for more efficient processing of a narrower set of applications, such as agentic AI applications. Google runs its Gemini AI model on its TPUs, with Anthropic and Citadel Securities also among its clientele of TPU users.

Nvidia's GPUs, first developed in 1999 for rendering graphics on computers and gaming consoles, function by breaking complex computing problems into smaller tasks and resolving them simultaneously.

Demand for GPUs surged after the launch of OpenAI's ChatGPT in 2022, propelling Nvidia to the mantle of world's most valuable company in 2024.

Earlier this month, Google briefly overtook Nvidia by market value. Analysts told CNBC that Google parent Alphabet remains well positioned in AI thanks to its in-house AI development, extensive distribution network, and profitable cloud division.