Microsoft, BlackRock form fund to sink up to $100B into AI infrastructure

Microsoft is joining with BlackRock and other private equity investors in a new AI fund that aims to eventually raise $100 billion for datacenters and their supporting power infrastructure.

The Redmond-based megacorp today confirmed the Global AI Infrastructure Investment Partnership (GAIIP) along with BlackRock, Global Infrastructure Partners (GIP) and MGX, which is based in the United Arab Emirates (UAE) and chaired by a member of Abu Dhabi's royal family.

The fund intends to make investments in new bit barns and expand existing sites to meet customers ever-growing demand for compute, as well as to sink money into in energy infrastructure to provide fresh sources of power for the facilities.

The agreement will initially look to raise $30 billion of private equity capital from investors, and the alliance ultimately hopes to take that figure to $100 billion in total, including debt financing.

Investments are to be chiefly in the US, Microsoft says, and the remainder will be in "US partner countries," an annoyingly vague term that could mean almost anywhere in the world - although we would bet on some going to the UAE, given MGX's involvement.

According to the participants, the idea is to build datacenters using "an open architecture and broad ecosystem," with GPU giant Nvidia also supporting the project.

This could mean that any newly created infrastructure will be built around Nvidia's specialized DGX AI servers, or that the company is simply ready to supply GPU accelerators and software for the project.

Nvidia CEO Jensen Huang trilled in a canned statement: "Nvidia will use its expertise as a full stack computing platform to support GAIIP and its portfolio companies on the design and integration of AI factories to propel industry innovation."

It isn't clear if any of the investment will be going towards Microsoft's own existing network of datacenters, or if the resulting infrastructure will be separate. We asked the company for clarification, and will update if we get an answer.

Microsoft has already ploughed cash into AI and the datacenter construction to support it, with reports last year that it was earmarking "many billions of dollars" for expansion. Earlier this year, The Reg reported that Microsoft was planning to triple its growth in additional DC capacity during the first half of its fiscal year 2025, which started in July.

The Windows biz is also understood to be in talks with AI developer OpenAI to construct a massive supercomputer codenamed Stargate that would feature millions of AI accelerators at a cost of up to $100 billion.

In fact, the company has been building so much additional infrastructure that it has increased its own carbon dioxide emissions by nearly 30 percent, largely due to indirect emissions (Scope 3) from the construction projects.

The other part of this investment agreement concerns power, or meeting the unquenchable thirst for extra energy infrastructure to support the expanding fleet of AI bit barns. However, details here are remain vague.

Concerns continue to be raised about the amount of energy consumed by AI, particularly in training large models that require a hefty amount of powerful compute infrastructure.

One researcher warned last year that AI could soon consume as much electricity as a country such as Ireland, while another report this year forecast that AI might cause datacenters to account for 20 to 25 percent of the US power grid by 2030.

All of this led the CEO of global datacenter operator DigitalBridge to warn in May that power has become the constraining factor for continued growth.

This looming shortfall has forced datacenter operators to pursue a number of strategies to ensure they can access enough energy to power them, with AWS taking over a facility built next to a nuclear power plant in Pennsylvania.

Microsoft itself is interested in developing small modular reactor (SMR) tech to provide power for its server farms, even hiring a director of nuclear technologies to oversee the project at the start of this year.

However, most of the exploits disclosed by operators are to invest in companies planning to produce renewable energy to feed into the grid, such as the recent deal between Meta and Sage Geosystems for geothermal energy. Others include wind and solar projects.

Microsoft chief Satya Nadella said his company is committed to ensuring AI helps advance innovation and drives growth across the economy - and no doubt please shareholders in the process.

"The Global AI Infrastructure Investment Partnership will help us deliver on this vision, as we bring together financial and industry leaders to build the infrastructure of the future and power it in a sustainable way." ®