Microsoft eyes $100 billion to slake AI's thirst for energy and compute power

The US software giant has teamed up with investment giant BlackRock, infrastructure investor Global Infrastructure Partners (GIP), and Abu Dhabi-based AI investment firm MGX to launch a new fund that will invest in data centres and energy production to power AI services.

Called the Global AI Infrastructure Investment Partnership (GAIIP), it aims to attract an initial $30 billion of private equity investment from a combination of investors, asset owners and corporates. In turn, Microsoft et al hope that this will mobilise up to $100 billion in total investment when debt financing is included.

Most of the money will be ploughed into projects in the US, while the remainder will be invested into so-called partner countries. Microsoft didn't specify exact proportions.

"The capital spending needed for AI infrastructure and the new energy to power it goes beyond what any single company or government can finance," said Brad Smith, vice chair and president of Microsoft. "This financial partnership will not only help advance technology, but enhance national competitiveness, security, and economic prosperity."

GAIIP has partnered with Nvidia, which will provide expertise when it comes to AI data centres and AI factories. No doubt Nvidia hopes this deal will help it secure a steady flow of orders over the coming years.

This is obviously great news for the data centre and energy ecosystems, but beyond repeating the refrain about AI's transformative potential, the announcement provides very little detail on how or when investors can expect to earn a return.

BlackRock CEO Larry Fink said GAIIP "will unlock a multi-trillion-dollar long-term investment opportunity," without specifying what he means by long-term. Nor did he proffer any ideas as to what services might make use of all this infrastructure and what the revenue model will look like.

So far, GenAI has proven adept at handling various tasks, from handling customer interactions and answering queries, to generating videos, images and summarising documents. All impressive feats for a non-human, but it is hard to ascribe monetary value to any of them.

"We are committed to ensuring AI helps advance innovation and drives growth across every sector of the economy," said Microsoft CEO Satya Nadella. "The Global AI Infrastructure Investment Partnership will help us deliver on this vision, as we bring together financial and industry leaders to build the infrastructure of the future and power it in a sustainable way."

Again, it's not clear what AI services "every sector of the economy" will fork out for.

The need for detail is becoming more pressing, as more and more capital is splurged on AI, putting greater pressure on the technology to deliver on its promise.

The oft-quoted metric that highlights the potential problem comes from Sequoia Capital's David Cahn. In June he calculated that the difference between how much capital has been spent on AI infrastructure and how much revenue AI services are generating is $600 billion.

With GAIIP and its ambition to attract $100 billion of investment, the size of that potential problem looks set to get a whole lot larger.