Alphabet and Blackstone’s jointly backed AI cloud venture is running into real-world obstacles, with data-center delays piling up at multiple locations meant to host Google’s AI chips.
The venture, known internally as “Project Braid,” launched with $5 billion from Blackstone and plans to lease Google’s AI processors to customers starting in 2027. GOOGL stock edged up 0.02% as the news broke.
One of the first problems: Google pulled the plug on a plan to have data-center developer Crusoe build a facility in Cheyenne, Wyoming. Google took control of the project and is now reapplying for permits after losing confidence in Crusoe’s ability to deliver. Local officials told residents the project would be scaled back.
A second proposed location fell through because it didn’t have the right transformers on hand. Equipment shortages are a real issue right now, with wait times running close to a year, according to McKinsey.
Texas created another headache. Governor Greg Abbott ordered a freeze on new data-center project approvals while the state gathers more information on how developers and tech companies pay for electricity. That disrupted several of Project Braid’s plans in the region.
Project Braid CEO Benjamin Treynor Sloss isn’t hitting the alarm button. “It is very common for individual potential sites to progress at different rates,” he said in a statement. He added the venture has a “diversified set of options” and is making “strong progress.”
The odds of data-center projects meeting their delivery dates have dropped to around 50%, down from roughly 90% three years ago, according to people familiar with the matter. That’s not just a Project Braid problem.
JPMorgan estimated in May that more than 60% of capacity planned for completion in 2027 hasn’t even started construction. Shortages of switchgear and skilled labor are making things worse.
Community pushback and political scrutiny are also creating delays. Data centers have become a campaign issue ahead of this year’s midterm elections, with organized opposition pushing regulators to take a harder look at new projects.
Project Braid’s backers are now combing their networks for new sites. Google has reached out to neocloud executives it works with for help. Blackstone has brought in consultants and allies. The team has now identified 29 potential data-center locations.
Google projects up to $205 billion in capital expenditures this year and set up the joint venture partly to keep some of that spending off its own balance sheet. The structure also shifts some risk to Blackstone, which wants to become the world’s largest financier of digital infrastructure.
Treynor Sloss said demand for the venture’s compute capacity is running higher than expected, and the team is evaluating a broader pool of sites to support long-term scaling plans.
The venture still says it is on track to deliver its targeted 500 megawatts in 2027.
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