Microsoft, Nvidia, and others inject $40B into AI bubble with massive datacenter deal

Big Tech and big money unite to back world’s biggest bit-barn buyout

The AI bubble just keeps getting bigger. A consortium featuring BlackRock, Microsoft, Nvidia, xAI, and MGX is buying Aligned Data Centers in a deal valuing the operator at around $40 billion, in what is reportedly the biggest datacenter acquisition to date.

US-based Aligned Data Centers, currently owned by Macquarie Asset Management, is being sold to a consortium led through the AI Infrastructure Partnership (AIP) - a group formed last year by BlackRock, its Global Infrastructure Partners unit, Abu Dhabi's state-backed MGX, and Microsoft, later joined by Nvidia, Elon Musk's xAI, the Kuwait Investment Authority, and Singapore's Temasek.

ADC's portfolio includes 50 datacenters in North and South America amounting to 5 GW of capacity - or at least that's what it'll have once all of its planned facilities are up and running, according to Macquarie. The company said, in its press release announcing the acquisition, that ADC has grown from just two datacenters in the Dallas and Phoenix markets to 50 in only seven years under Macquarie's management. 

Now it'll be up to the AIP consortium to take that even further in the name of fueling the expansion of AI for its flagship tech firms, and it has some scaling to do. 

According to AIP's own press release on the deal, the Partnership's goal is to "accelerate investment in next-generation AI infrastructure and advance the infrastructure and innovation needed to power the future of AI," and it intends to do so by mobilizing $30 billion in equity from investors, "with the potential to reach $100 billion including debt financing." The deal is AIP's first investment, the company noted.

This is just the latest in a string of high-profile deals involving AI firms snatching up computing resources, and while it may be the largest to date, it's just another indication that companies are willing to go into massive debt to fuel the AI bubble.

Investment bank Goldman Sachs recently predicted that datacenter capacity is likely to surge by 50 percent in the next two years, but it tempered that growth with a note that the "frenzied atmosphere" around AI investment of late is seeing companies deploy capital in a defensive manner in a bid to prevent being left behind. 

OpenAI and its Stargate initiative have banked big on borrowing to fuel its growth ambitions, signing a $300 billion cloud infrastructure deal with Oracle last month that analysts predict will require Oracle to go $100 billion into debt in order to support. 

Elon Musk himself (through xAI), an investor in AIP, heaped scorn on OpenAI for its debt dealings, claiming shortly after OpenAI announced Stargate that none of the firms involved actually had the money they were planning to spend on the program, instead creating a revolving door of debt that sees AI investors simply trade promissory notes to fuel their ambitions. 

"With AIP, MGX, and GIP's global reach, extensive resources, and deep expertise across AI, energy, and finance, we are poised to scale faster, innovate further, and redefine what's possible in sustainable data center infrastructure," ADC CEO Andrew Schaap said of the deal. 

Let's hope for their sake the bubble doesn't burst before some of those bills come due. ®