Blackstone Invests $5 Billion in New Neocloud Partnership with Google

The weather forecast in Silicon Valley? Cloudy with a chance of chip sales, heavy at times.

Shares of neocloud companies Coreweave and Nebius dipped 3.8% and 1%, respectively, on Tuesday after Google and Blackstone announced a neocloud joint venture of their own. The JV will employ Google’s very own in-house chips, making it not just a shot at the neocloud firms serving spillover AI compute demand, but also at Nvidia.

Head in the Clouds

Taking on Nvidia may just be the name of the game for Google. The company has already landed notable sales of its tensor processing chips (TPUs) to both Anthropic and Meta, and scaling a neocloud business built on its chips could help make them a true alternative to Nvidia’s AI industry-standard GPUs. 

Blackstone, already the world’s largest private owner of data centers, will initially invest $5 billion, which sources told Bloomberg would be worth $25 billion with leverage. The asset manager will be the majority owner of the JV as it enters the neocloud market at a time when demand for AI compute shows no signs of slowing down: 

• Google alone is now processing 3.2 quadrillion tokens per month, CEO Sundar Pichai said at the company’s I/O developer conference on Tuesday, up from 480 trillion tokens per month a year ago. Nebius, meanwhile, reported that quarterly revenue multiplied by seven from the previous year in its earnings call last week.
• The JV will launch with 500 megawatts of compute capacity online by 2027, though with “plans to scale significantly over time,” Blackstone said in a statement. 

I/O You: Expect Google’s token processing to keep going up. The company spent much of the I/O event on Tuesday showcasing the myriad ways it plans to continue to integrate AI into, well, just about every Google tool. That includes a massive overhaul of Search that will further replace blue links to third-party sites with AI-generated responses. The company will also let users employ “information agents” to continuously scour the web and provide alerts for newly published information. They haven’t named the feature yet, but we’d check whether “Google Alerts” is up for grabs.