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BlackRock Inc. is preparing to launch a more than $30 billion artificial intelligence investment fund with tech giant Microsoft Corp. to build data centers and energy projects to meet growing demand driven by AI, according to people familiar with the matter.
The fund, which BlackRock is launching with its new infrastructure investment arm, Global Infrastructure Partners, would be the largest investment vehicle ever raised on Wall Street. MGX, an investment firm backed by Microsoft and Abu Dhabi, is acting as general partner for the fund. Fast-growing chipmaker Nvidia is providing expertise, the people said.
The investment vehicle is aimed at accommodating the massive demand for power and digital infrastructure needed to develop AI products, which are expected to face severe capacity shortages in the coming years, according to people familiar with the matter. AI’s computing power requires much more energy than previous technological advances, putting a strain on existing energy infrastructure.
The fund will be the firm’s first large fund since private infrastructure investment group GIP agreed to be acquired by BlackRock for $12.5 billion earlier this year, a deal that is expected to close in October.
BlackRock Inc., the world’s largest asset manager, has highlighted the energy sector as one of its biggest opportunities for growth. “In my nearly 50 years in finance, I have never seen greater demand for energy infrastructure,” Chief Executive Larry Fink wrote to investors earlier this year.
The soon-to-launch fund is the latest by a major asset manager to address the growing demand for energy to power AI and cloud computing. Earlier this year, Microsoft agreed to provide $10 billion in financing for renewable power projects built by Canada’s Brookfield Asset Management. Microsoft has committed to purchasing zero-carbon energy for 100% of its energy consumption by 2030.
“The nation and the world will need additional capital investment to accelerate the development of the AI infrastructure we need, and these efforts are an important step forward,” Microsoft President Brad Smith said.
Blackstone announced plans to create a $40 billion infrastructure investment firm with Saudi Arabia’s backing in 2017, and Brookfield raised $28 billion last year for what was said to be the largest infrastructure fund in history.
The International Energy Agency estimates that global electricity consumption by data centers will exceed 1,000 terawatt-hours by 2026, more than double 2022 usage.
The United States, home to one-third of the world’s data centers, is seeing its first surge in electricity demand in two decades, in part due to these energy-intensive facilities: The five-year electricity demand growth forecast for the U.S. has nearly doubled in the past year, from 2.6% to 4.7%, according to a report by Grid Strategies.
Nvidia and MGX did not immediately respond to requests for comment. BlackRock declined to comment.
