BlackRock and Microsoft join forces to launch $30bn fund for AI infrastructure

BlackRock, the world’s largest money manager, is set to launch a groundbreaking artificial intelligence (AI) investment fund in partnership with technology giant Microsoft.

The fund, valued at more than $30 billion, aims to address the growing demands for AI infrastructure by building data centres and energy projects.

The investment vehicle, known as the Global AI Infrastructure Investment Partnership, is poised to become one of the largest ever raised on Wall Street. It marks the first major fund since BlackRock’s acquisition of Global Infrastructure Partners (GIP) for $12.5 billion earlier this year, a deal expected to close in October.

Microsoft and MGX, an Abu Dhabi-backed investment company, will serve as general partners in the fund. Nvidia, the rapidly expanding chipmaker, is set to provide expertise to the initiative.

The fund’s primary objective is to tackle the substantial power and digital infrastructure requirements of AI products, which are anticipated to face severe capacity constraints in the coming years. AI computing power demands significantly more energy than previous technological innovations, putting strain on existing energy infrastructure.

Larry Fink, chief executive officer of BlackRock, highlighted the energy sector as a key growth opportunity. In a letter to investors earlier this year, Fink stated, “In my nearly 50 years in finance, I’ve never seen more demand for energy infrastructure.”

Brad Smith, president of Microsoft, emphasised the importance of this initiative, saying, “The country and the world are going to need more capital investment to accelerate the development of the AI infrastructure needed. This kind of effort is an important step.”

The International Energy Agency projects that global electricity consumption by data centres could surpass 1,000 terawatt-hours by 2026, more than doubling the amount used in 2022. In the United States, which hosts one-third of the world’s data centres, electricity demand is rising rapidly for the first time in two decades, driven partly by these energy-intensive facilities.

A report from Grid Strategies indicates that five-year projections for electricity demand growth in the US have nearly doubled over the past year, increasing from 2.6 per cent to 4.7 per cent.

The partnership aims to mobilise up to $100 billion in total investment potential when including debt financing. Investments will primarily focus on the United States, with the remainder allocated to partner countries.

This initiative follows Microsoft’s earlier commitment to back $10 billion in renewable electricity projects built by Canada’s Brookfield Asset Management. Microsoft has pledged to ensure 100 per cent of its energy consumption is matched by zero carbon energy purchases by 2030.