TLDR
- A group of 10 banks is providing $22 billion in debt financing to Crux AI, the cloud venture backed by Alphabet and Blackstone.
- The debt will be used to purchase Google Tensor Processing Units (TPUs) and is backed by the chips and customer contracts.
- Blackstone has committed $5 billion in equity, while Google provides TPUs, software, and services.
- Crux AI plans to bring its first 500 megawatts of data center capacity online in 2027.
- GOOGL was up around 1% in premarket trading following the news, closing the prior session at $342.87.
Crux AI, the cloud venture formed by Alphabet and Blackstone, has secured $22 billion in debt financing from a group of 10 banks. The deal was first reported by Bloomberg News on September 16.
GOOGL closed the prior session at $342.87, down 0.61%. The stock was trading up around 1% in premarket following the news.
The loan will be used to buy Google-developed Tensor Processing Units, known as TPUs. The debt is backed by the value of those chips and by customer contracts that Crux AI has in place.
Banks involved in the deal include Goldman Sachs, Sumitomo Mitsui Banking Corp, Barclays, BNP Paribas, and Bank of Nova Scotia. The group is also working to bring in additional lenders through syndication to spread the risk.
The financing could later be replaced with long-term debt from institutional investors in the investment-grade bond market.
What Is Crux AI?
Google and Blackstone first announced Crux AI in May. The venture is designed to meet demand for dedicated AI computing capacity from labs, tech companies, enterprises, and governments.
Blackstone has put in an initial $5 billion in equity. Google is contributing its custom TPUs, along with software and services. Crux AI formally launched last week.
The platform targets customers that need dedicated computing infrastructure tailored to their specific requirements.
2027 Capacity Target
The venture plans to bring its first 500 megawatts of data center capacity online in 2027. Further expansion is expected after that.
The $22 billion loan provides the capital needed to build out that hardware infrastructure. How quickly Crux AI converts capacity into customer contracts will be the next thing to watch.
For Alphabet, the project puts its TPUs at the center of an externally financed AI cloud platform, broadening their use beyond Google’s own internal operations.
On the analyst side, Alphabet currently holds a Strong Buy consensus based on 28 ratings over the past three months. Of those, 24 analysts rate it a Buy and 4 rate it a Hold.
The average GOOGL price target sits at $427.08, which implies upside of around 25% from the current price.
BNP Paribas, Barclays, and SMBC declined to comment. Blackstone, Alphabet, Goldman Sachs, and Bank of Nova Scotia did not respond to requests for comment at the time of reporting.
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