Alphabet and Blackstone Secure $22B for TPU-Powered Cloud Venture

Alphabet Inc., the parent company of Google, and Blackstone Inc. have secured $22 billion in debt financing for their cloud venture Crux AI to purchase Tensor Processing Units (TPUs) developed by Google.

The group of 10 banks providing the financing includes Goldman Sachs, Sumitomo Mitsui Banking Corp, Barclays, BNP Paribas, and Bank of Nova Scotia. The loan will be backed by the value of the TPUs as well as customer contracts signed by Crux AI.

Crux AI plans to bring its first 500 megawatts of data center capacity online in 2027, with additional expansion expected later. Alphabet's investment in Crux AI could help broaden the use of its TPUs beyond Google's own operations by putting the chips at the center of a separately financed AI cloud platform.

The success of Crux AI will depend on how quickly it can turn planned capacity into signed customer demand, and how much TPU capacity customers actually use. Alphabet has a Strong Buy consensus among analysts, with an average stock price target of $427.08, implying a 24.56% upside from the current price.