Blackstone has entered a joint venture with Google to build a "neocloud" platform specifically designed around Google's Tensor Processing Units, or TPUs.
The venture, named Krux AI, was initially announced with a $5 billion investment commitment from Blackstone.
The partnership marked a clear departure from Blackstone's typical strategy of acquiring existing companies with established cash flows.
Krux AI is led by a chief executive who spent two decades at Google, with deep experience deploying TPUs in data centre environments.
Numbers keep growing
The venture's ambitions have expanded significantly since its initial announcement, with reports indicating Blackstone now intends to invest several multiples of the original $5 billion commitment.
Total investment is expected to reach between $10 billion and $20 billion.
That capital is earmarked specifically for purchasing TPUs, rather than broader infrastructure costs such as land, construction or networking equipment.
Because chips represent roughly 60% of the total cost of building a data centre, the venture will require substantial additional capital to complete the surrounding physical infrastructure.
Pattern spreading across private equity
Blackstone is raising capital for its AI investments from its existing funds, though the specific sources remain unclear for now.
Private equity firm KKR is pursuing a broadly similar strategy, partnering with Nvidia, the Kuwait Investment Authority and Vistra Energy to establish Helix Digital Infrastructure, a data centre company.
Unlike Blackstone's neocloud model, the KKR-backed Helix project focuses on building data centres for customers to run their own software and hardware, representing a shift toward building entirely new companies rather than traditional private equity acquisitions.
Blackstone, which manages $1.3 trillion in assets, has not disclosed specific return expectations, though equity stakes in companies such as OpenAI and Anthropic have the potential to return two to four times the initial investment.
Meanwhile, capital drawn from credit funds typically targets returns of around 6%, with many opportunities expected to target 20% returns or higher depending on the specific deal.
