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Apollo Acquires Majority Stake in Stream Data Centers to Capitalize on AI-Driven Infrastructure Growth

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Apollo has agreed to buy a majority interest in Stream Data Centers (SDC) as part of a strategic bet on the booming demand for digital infrastructure driven by artificial intelligence and cloud computing. Data centers, critical hubs housing computing hardware, are expected to see global spending of up to $6.7 trillion by 2030, according to McKinsey.

Stream Data Centers specializes in building, leasing, and managing large-scale data center campuses. It has completed over 20 projects and has an extensive pipeline with multi-gigawatt capacity. Apollo aims to scale SDC to become a key partner for major hyperscalers like Amazon, Microsoft, and Google, who increasingly rely on third-party developers for land acquisition, regulatory approvals, and power sourcing for their data centers.

Apollo partner Trevor Mills emphasized the ongoing and diverse demand from hyperscalers requiring collaboration with external developers. This investment aligns with rising capital expenditures by tech giants — Meta recently raised its annual spending forecast by $2 billion to as much as $72 billion, Microsoft plans over $30 billion in its fiscal first quarter, and Alphabet increased its 2024 capex target to $85 billion, with further rises expected to meet AI demands.

While financial terms were not disclosed, Apollo’s president Jim Zelter highlighted that data centers will need $1.5 trillion in external financing by 2030, with private credit accounting for $800 billion — a space where Apollo leads. The International Energy Agency forecasts electricity demand for data centers will more than double by then, surpassing Japan’s current total consumption.

Other major asset managers like Blackstone, KKR, and BlackRock have also committed billions to data center investments, underscoring the sector’s growing importance. Stream Data Centers’ management will retain a minority stake and continue running operations post-deal.

CoreWeave Gains Role in Google-OpenAI Cloud Deal to Supply AI Computing Power

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CoreWeave, a specialized cloud computing company built on Nvidia GPUs, has become a key provider in Google’s new partnership with OpenAI, sources told Reuters. Under the deal, CoreWeave will supply computing capacity to Google Cloud, which will then sell these resources to OpenAI to support growing demand for AI services such as ChatGPT. Google will also contribute some of its own computing infrastructure directly to OpenAI.

This arrangement underscores the evolving relationship between major cloud hyperscalers like Google, Microsoft, and Amazon and emerging “neocloud” providers like CoreWeave, which focus heavily on AI workloads. CoreWeave went public in March and already has a significant presence in OpenAI’s infrastructure, holding a five-year $11.9 billion contract and an equity investment of $350 million from OpenAI.

The partnership was expanded last month with an additional agreement worth up to $4 billion through 2029. Bringing Google Cloud onboard as a customer helps CoreWeave diversify its revenue while leveraging Google’s deep pockets to secure better financing for data center expansions. For Google, it enhances its cloud business by tapping into the surging AI market and positions it as a neutral provider of compute resources amid competition with Amazon and Microsoft.

CoreWeave’s stock has surged over 270% since its IPO, reflecting strong investor confidence despite concerns over leverage and GPU demand shifts. Meanwhile, Microsoft, CoreWeave’s former largest customer, is reconsidering its data center strategy and renegotiating investment terms with OpenAI.

Neither CoreWeave, Google, nor OpenAI commented on the details of the deal.

Blackstone Remains Committed to Data Center Investments Despite DeepSeek Concerns

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Blackstone reaffirmed its commitment to data center investments on Thursday, dismissing concerns that the rise of DeepSeek’s low-cost AI models would weaken demand for physical infrastructure. The alternative asset manager, which holds $80 billion in leased data centers, emphasized its “prudent approach” and strong partnerships with major global companies.

Data centers remain critical for AI development, providing the infrastructure needed to store, process, and analyze massive datasets. While investors previously saw data centers as key beneficiaries of AI growth, DeepSeek’s unexpected emergence has sparked debate over whether lower-cost AI models could reduce demand for such facilities.

Blackstone’s President and Chief Operating Officer Jonathan Gray addressed these concerns in a post-earnings call, stating that while the company is monitoring DeepSeek’s impact, lower AI costs could actually drive broader adoption, ultimately increasing data center demand. “As usage goes up significantly, there’s still a vital need for data centers. We still think it’s a very important segment,” Gray said.

Analysts at Jefferies echoed this sentiment, arguing that hyperscale cloud providers are unlikely to cut capital expenditures given the intensifying competition in AI. Tech giants such as Microsoft and Meta have also defended their aggressive AI spending, insisting that substantial investment is necessary to remain competitive.

Despite Blackstone’s confidence, its shares fell nearly 4% in afternoon trading, reflecting investor caution amid the evolving AI landscape.