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Blackstone and Alphabet’s Google have agreed to form a joint venture to build and operate AI data centers in the United States.
The new platform will offer access to Google Tensor Processing Units as compute as a service for enterprise customers.
Blackstone plans to invest $5b in equity, while Google will provide AI chips, software, and data center technology.
The venture targets 500 megawatts of capacity by 2027, with potential expansion as demand for AI infrastructure changes.
Alphabet (NasdaqGS:GOOGL) is entering this AI data center venture while its stock trades at $387.66. Over the past year, the share price is up 137.2%, and over 3 years it is up 218.9%, with a 23.0% return year to date. Those numbers show how closely investors are watching Alphabet’s AI initiatives and the ways it seeks to use its proprietary chips.
For readers tracking Alphabet, this venture adds another data point to the broader AI story around the company’s custom hardware and cloud footprint. How effectively the partnership attracts enterprise AI workloads and differentiates Google TPUs from alternative compute options will be key themes to monitor over the coming years.
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2 things going right for Alphabet that this headline doesn’t cover.
Quick Assessment
⚖️ Price vs Analyst Target: At US$387.66, Alphabet trades about 9% below the US$427.89 analyst target, which sits within a typical range of fair value views.
❌ Simply Wall St Valuation: Shares are described as trading 16.5% above estimated fair value, which suggests an overvalued status on this model.
✅ Recent Momentum: The stock is up 13.5% over 30 days, indicating strong short term buying interest around the AI narrative.
To explore whether it might be a good time to buy, sell or hold Alphabet, refer to Simply Wall St’s company report for the latest analysis of Alphabet’s fair value.
Key Considerations
📊 The Blackstone venture ties Alphabet’s AI chips directly to enterprise data center demand, which connects this news to the long term revenue mix in Cloud and AI services.
📊 Monitor AI data center capacity ramp up compared with the 500MW by 2027 goal, uptake of TPU based workloads, and how these elements relate to analyst revenue and earnings expectations.
⚠️ The stock is reported as trading 16.5% above estimated fair value and carries a P/E of about 29.3 versus an industry average near 12.7, so execution risk on this capital intensive AI expansion is an important factor.
