Strategic View:
Blackstone and Digital Realty announce a major expansion of their Hyperscale Data Center JV. The “Permanent Capital Club” is essential to funding the trillion-dollar AI infrastructure buildout.
Full Story:
The AI cloud has a landlord, and it’s a club. On December 20, Blackstone and Digital Realty announced the expansion of their hyperscale joint venture. This partnership is the blueprint for how the $1 trillion AI buildout will be funded.
Building a single AI data center campus now costs upward of $5 billion. No single company—not even Blackstone—wants to take that balance sheet risk alone. Development risk, power procurement risk, and tenant concentration risk are too high.
The “Hyperscale Club.” Digital Realty brings the technical development capability and the customer relationships. Blackstone brings the infinite cost of capital. By venturing together, they create a “Permanent Capital” vehicle. They build the asset, stabilize it with a lease to Microsoft or Google, and then hold it forever. This club structure allows them to move at the speed of AI. While others are struggling to raise project finance, this club writes equity checks. It is a monopoly of capital meeting a monopoly of demand.
Why It Matters: This is the “Industrialization of AI.” The physical layer of the internet is becoming an asset class reserved for the largest clubs in the world. Smaller developers are being squeezed out by the sheer capital intensity of the AI era.
Source: BlackRock
