Why Microsoft has joined hands with OpenAI's biggest rival—Musk's xAI
What's the story
Elon Musk's AI company, xAI, has teamed up with tech giants Microsoft and BlackRock to establish a $30 billion artificial intelligence infrastructure fund.
The partnership marks a major collaboration in the AI space and reinforces the growing reality that Microsoft is no longer exclusively tied to OpenAI.
Despite investing approximately $13 billion in OpenAI, Microsoft is now actively diversifying its AI bets and developing in-house models it believes can rival OpenAI's offerings, according to Bloomberg.
Investment strategy
Consortium to focus on AI infrastructure investments
NVIDIA Corp., which is famous for its AI chips and was previously named as the group's technical advisor, has also officially joined the alliance.
The Microsoft-backed consortium, now rebranded as the AI Infrastructure Partnership (AIP), will focus on infrastructure investments mainly in the US. This includes energy projects, with some funds going to partner countries.
BlackRock's CEO Larry Fink said clients like pensions and insurers are interested in long-term infrastructure projects like this one.
Collaboration
Energy suppliers collaborate with AIP for AI data centers
Last year, BlackRock and Microsoft launched a coalition with MGX, a UAE investment firm also linked to OpenAI-SoftBank's Stargate project.
They initially aimed to raise $30 billion in private equity over an unspecified period, with plans to eventually leverage up to $100 billion in investments.
The consortium said energy suppliers NextEra Energy Inc. and GE Vernova Inc. have "agreed to collaborate with AIP to accelerate the scaling of critical and diverse energy solutions for AI data centers."
Future projections
AI infrastructure partnership to address global electricity demand
The growing investment in AI has already affected global electricity demand.
By 2034, the energy consumption of data centers is expected to surpass 1,580 terawatt hours, which is equal to India's current consumption, according to Bloomberg.
This underscores the immediate requirement of sustainable energy solutions in the fast-growing domain of artificial intelligence.
OpenAI's efforts
OpenAI expansion efforts are also picking pace
OpenAI has partnered with SoftBank and Oracle to develop multiple AI-focused data centers in the US.
Known as The Stargate Project, the initiative will begin with a $100 billion investment, eventually reaching $500 billion.
Stargate will partly incorporate renewable energy to help meet its power demands. OpenAI CEO Sam Altman recently unveiled first site of the project.
Separately, OpenAI and SoftBank Group have partnered to develop and market "Cristal Intelligence,"—an advanced AI solution to securely integrate enterprise systems and data.