Google, Blackstone to Create AI Cloud Firm With In-House Chips

Alphabet Inc.’s Google agreed to create an artificial intelligence cloud business with Blackstone Inc., aiming to compete with companies like CoreWeave Inc. in a burgeoning market.

The project will rely on an initial $5 billion in equity capital from Blackstone, which will become the majority owner, according to a statement Monday. Including leverage, the investment will be worth $25 billion, a person familiar with the matter said.

By 2027, the goal is to have 500 megawatts’ worth of computing capacity. The data centers will run Google’s homegrown AI chips called tensor processing units, or TPUs, that are designed ...