BlackRock and Microsoft prepare to launch $30B artificial intelligence investment fund

BlackRock and Microsoft are making a “huge bet” that the next AI boom will focus on infrastructure, The New York Times wrote. But while supply bottlenecks — due to heavy reliance on US chipmaker Nvidia and limited availability of power — risk holding back the AI revolution, the “biggest threat… would come from waning demand,” The Economist argued. Major banks and venture capital firms, which have already questioned the value of generative AI products, could start cutting down on investments if AI profits fail to materialize. The disillusionment could be explained by the “hype cycle” of innovation, excitement, despondency, and adoption, with AI eventually making a comeback, but only about a fifth of breakthrough technologies complete the cycle.

The AI industry could consume as much energy as a country the size of the Netherlands by 2027, one study found. Microsoft pointed to AI for its rising emissions, caused not just by AI’s electricity demand, but also possibly due to its plans to build data centers that require carbon-intensive materials, MIT Technology Review argued. But tech giants are already facing opposition: Google said Tuesday it would rework from scratch its plan to build a $200 million data center in Chile after opposition from locals and environmentalists.

Some in the tech industry believe regulatory uncertainty in the US and European Union is hurting AI innovation, and the United Arab Emirates — with its special economic zones or “sandboxes,” where startups can more freely experiment — is becoming increasingly attractive, Semafor’s Reed Albergotti reported. Abu Dhabi’s “kinetic expansion” stands in contrast to San Francisco, where crime and housing shortages threaten tech innovation. Still, it may not be wise to bet against “the engine of American innovation,” which is what allows the US to afford more stringent regulations, he argued.