The world’s largest asset manager, BlackRock, is in talks with various governments to explore ways to fund critical investments that support the growth of artificial intelligence (AI). 

As AI gains momentum, it is expected to boost global productivity significantly. However, this advancement comes with a substantial requirement for data centers and semiconductor plants, which consume enormous amounts of electricity.

________________________________________________________________________

• BlackRock is in discussions with governments about funding critical AI infrastructure investments.

• AI data centers require unprecedented amounts of power, posing challenges for G7 countries.

• Private capital, including pension funds and insurers, is crucial in supporting the trillion-dollar AI investments.

________________________________________________________________________

BlackRock Engages with Governments to Fund AI Infrastructure

BlackRock’s CEO, Larry Fink, addressed this issue remotely at a meeting of Rome’s B7 business groups, which are members of the Group of Seven (G7) states. 

The conference preceded the meeting of finance ministers and central bankers from the G7 advanced economies, which was set to take place in Italy next week.

During his speech, Fink emphasized the unprecedented power demand that AI data centers will require, stating, “These AI data centers will require more power than anything we could ever have imagined. We at the G7 do not have enough power.” 

This statement highlights the immense energy consumption associated with AI infrastructure and the potential challenges it poses for countries.

Fink further pointed out that data centers will likely be built in regions with more affordable power supplies. 

This may necessitate state subsidies in areas where energy costs are not competitive. 

This raises concerns about the competitive landscape among countries vying to attract and support AI-related investments.

The investments required to build and power the data centers and chip factories that form the backbone of AI technologies are estimated to be in the trillions of dollars. 

Fink believes that such substantial investments require the participation of private investors and could present a significant opportunity for pension funds and insurers.

Japan has already recognized the increasing demand for electricity, which is driven by the growth of semiconductor plants and data centers supporting AI. 

The country recently announced its projection that electricity output will need to increase by 35% to 50% by 2050 to meet this growing demand.

BlackRock is actively engaging in conversations with many governments to explore ways to attract private capital to support these critical investments. 

Fink emphasized that G7 states alone cannot bear the cost, given the risk of a “fiscal crisis,” stating, “The deficits we’re seeing in the G7 are becoming a burden for my children, your children, our grandchildren.”

As the world continues to embrace AI and its transformative potential, the discussions between BlackRock and governments highlight the urgent need for collaboration between the public and private sectors to ensure the necessary infrastructure and power supply are in place to support this technological revolution.

Subscribe to our newsletter now and get the inside edge to the financial world!