Summary Bullets:
• BlackRock is launching the investment vehicle with its new infrastructure unit, Global Infrastructure Partners.
• Microsoft and MGX, the investment company backed by Abu Dhabi (UAE), are general partners in the fund. Nvidia will act as an advisor, focusing on factory design.
Data center infrastructure stands at the crux of the generative AI (genAI) revolution: without bricks and mortar, without chips, without servers and networking gear, there would be no genAI bots. The power-hungry algorithms that feed Chat-GPT and other familiar platforms require vast amounts of hardware as well as lots of energy. The International Energy Agency (IEA) forecasts electricity consumption by data centers from workloads such as AI will surpass 1,000 terawatt-hours by 2026, more than twice the amount – 460 terawatt-hours (TWh) – used in 2022.
However, there are nowhere near enough data center facilities for the AI age, and building the necessary infrastructure required to advance and accelerate the adoption of AI is very capital-intensive. Developing increasingly powerful AI capabilities will require significant investment going forward. As a result, massive amounts of private capital are being channeled into this sector. In an unprecedented move in terms of scope, Microsoft has joined the world’s largest money manager, BlackRock, Global Infrastructure Partners (GIP), and MGX, to invest a whopping $100 billion in data center and supporting power infrastructure. These three founders announced the Global AI Infrastructure Investment Partnership (GAIIP) to invest in new and expanded data centers to meet growing demand for computing power. GAIIP seeks to raise up to $30 billion in equity investments and leverage to support up to an additional $70 billion in debt financing. These investments will be mainly focused on the US, which hosts a third of the world’s data centers. It is certainly possible that some of the money will also go to the UAE, given MGX’s involvement.
MGX was created in Abu Dhabi earlier in 2024 to invest in AI and advanced technologies with global partners. It has the backing of Abu Dhabi’s sovereign wealth fund Mubadala, and it is currently negotiating with OpenAI to pour more capital in the startup.
The partnership will support an open architecture and broad ecosystem, providing full access on a non-exclusive basis for a diverse range of partners and companies. Nvidia will support GAIIP, offering its expertise in AI data centers and AI factories to benefit the AI ecosystem. BlackRock has targeted the energy sector as one of its top priorities as increasingly large amounts of private capital are channeled into the data center sector.
As the processing power required to run GenAI workloads keeps growing, technology companies face an unprecedented challenge when it comes to gaining access to data center infrastructure and the utilities required to run it in the AI age. As an example, and in an unrelated development, Microsoft is also considering a deal to reopen the Three Mile Island nuclear plant in Pennsylvania (US), which would be brought online in 2028, to buy all the power produced in the plant to feed the demands for power as a result of increased data center capacity.