Alphabet and Blackstone's cloud computing joint venture has encountered delays in the site selection for data centers originally planned to deploy Google chips. Internally referred to as Project Braid, this entity was initiated with a $5 billion investment from Blackstone, aiming to lease Google AI processors to customers starting in 2027, categorized under the neocloud type of leased computing power.

The joint venture aims to operationalize approximately 500 megawatts of capacity by 2027, with Google providing TPU chips and supporting software services. The CEO is Benjamin Treynor Sloss, who comes from Google; Jessica Fischer, CFO of Charter Communications, is set to leave on October 15 to join the joint venture. The product positioning allows customers to rent TPUs without going through a main Google Cloud account.

Insiders indicate that early setbacks include Google's cancellation of arrangements for a data center developed by Crusoe in Wyoming due to lost confidence in its costs and timelines. Crusoe subsequently withdrew from the Project Jade site near Cheyenne, which has about 1.8 gigawatts of capacity, and utility companies are now directly connecting with potential large-load customers, with power supply timelines pointing to early 2028.

Another site was deemed unsuitable for the project due to a lack of required power transformers. The freeze on data center projects in Texas has also disrupted other plans. Industry-wide, statistics from JPMorgan show that over 60% of data center capacity planned for completion in 2027 has not yet started, with about 7% already delayed, primarily due to supply chain, permitting, and power access issues.

Blackstone's QTS terminated the Digital Gateway project in Prince William County, Virginia, in July: the approximately 2,100 acres and over 22 million square feet of planning were invalidated due to litigation over zoning public notice defects, and the company withdrew its appeal to the state Supreme Court. This site is not the same entity as the current joint venture but illustrates that the same investor faces local opposition and legal processes when acquiring land in power corridors.

Mechanically, this is a supply constraint rather than a disappearance of demand. Buyers want to lock in Google-customized chips for cloud and model companies by 2027; sellers are a joint structure of real estate funds and chip manufacturers. The delays push back the timeline for renting TPUs in 2027, providing short-term benefits to Nvidia's already operational cloud and ready cabinets; however, it pressures the valuation of neocloud, which sells future computing power based on timelines, and the customer expansion plans betting on Google chip spillover. Funds are in place, but implementation is hindered by transformers, grid queuing, and state-level freezes, making it impossible for capital expenditures to convert into usable megawatts as originally scheduled.

Source: Public Information