Alphabet's Google and Blackstone said on Mondaythat they will form an artificial intelligence cloud business ​venture aimed at capitalising on an insatiable demand for AI computing services.

Blackstone, the world's largest alternative ​asset manager, will ​invest an initial $5 billion in equity to help bring 500 megawatts of data centre capacity online in 2027, with further expansion planned over ⁠time.

The U.S.-based venture will provide data centre capacity along with Google's custom AI chips, known as Tensor Processing Units, or TPUs, through a compute-as-a-service model.

The total investment value could reach $25 billion, including leverage, according to Bloomberg News.

Both companies did not ​immediately respond ‌to a request ⁠for comments on the ⁠Bloomberg report.

Blackstone has appointed Benjamin Sloss, a long-time Google executive, as CEO of the new ​venture.

Thomas Kurian, chief executive of Google Cloud, said ‌the venture would help address growing demand for TPUs ⁠by offering organisations additional ways to access computing capacity.

Analysts and investors have said Google is taking a sizeable share of new AI-driven computing demand, supported by its business tools and custom chips that have attracted customers such as Anthropic.

"This isn't the biggest headline number we've seen. But it's a high-quality bet on sustainable growth in AI infrastructure," said Brittain Ladd, AI and supply chain consultant at Florida-based Chang Robotics.

BLACKSTONE RAMPS UP AI INVESTMENTS

Blackstone has stepped up investments ‌in AI-related infrastructure, including data centres, power generation and transmission assets.

Those investments ⁠are valuable as the AI boom pushes operators to ​secure long-term energy supply deals.

The new partnership reflects rising demand for AI infrastructure and the need for large-scale capital deployment, Blackstone President Jon Gray said.

Spending by Big Tech ​firms on ‌AI infrastructure, including data centres, is expected to top $700 billion ⁠in 2026.

(Reporting by Natalia Bueno ​Rebolledo and Mrinmay Dey in Mexico City; Editing by Sherry Jacob-Phillips)