Microsoft (MSFT) and BlackRock (BLK) announced today that they are teaming up as part of a broader partnership that includes infrastructure investment firm Global Infrastructure Partners and technology investment firm MGX to invest up to $100 billion in artificial intelligence (AI) infrastructure.
The partnership has been named the Global AI Infrastructure Investment Partnership (GAIIP). It will focus on investing in new and expanded data centers to satisfy the growing demand of computing power, as well as the energy infrastructure required to power those facilities, the companies said in a joint press release.
"Mobilizing private capital to build AI infrastructure like data centers and power will unlock a multi-trillion-dollar long-term investment opportunity," said BlackRock CEO Larry Fink in a statement. "Data centers are the bedrock of the digital economy, and these investments will help power economic growth, create jobs, and drive AI technology innovation."
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"The capital spending needed for AI infrastructure and the new energy to power it goes beyond what any single company or government can finance," said Microsoft Vice Chair and President Brad Smith in a statement. "This financial partnership will not only help advance technology, but enhance national competitiveness, security, and economic prosperity."
BlackRock is in the process of acquiring Global Infrastructure Partners for $3 billion in cash and approximately 12 million shares of BlackRock stock. It said it expects the transaction to close on October 1, 2024.
Is Microsoft stock a buy, sell or hold?
Microsoft is recovering from a mid-summer slump and shares remain nearly 15% higher for the year to date. Unsurprisingly, Wall Street is bullish on the Dow Jones stock.
According to S&P Global Market Intelligence, the average analyst target price for MSFT stock is $502.15, representing implied upside about 16% to current levels. Additionally, the consensus recommendation is a Strong Buy.
Financial services firm CFRA Research is one of those with a Strong Buy rating and $490 price target on the blue chip stock.
"Looking ahead, we expect primary cash usage to be toward capital expenditures, as MSFT eyes growth tied to AI, but we anticipate that greater cash will be returned to investors as the company likely refrains from major M&A and free cash flow continues to grow," said CFRA Research analyst Angelo Zino in a September 17 note following news that Microsoft authorized a $60 billion share buyback plan and raised its dividend.
What does Wall Street think of BlackRock?
Wall Street is also upbeat toward BlackRock, with most analysts hopeful the financial stock can add to its 12% year-to-date gain.
According to S&P Global Market Intelligence, the average analyst target price for BLK stock is $936.35, representing implied upside of about 3% to current levels. Additionally, the consensus recommendation is a Buy.
CFRA Research also rates BLK stock a Buy with a price target of $935.
"We expect above-peer organic growth; an attractive mandate pipeline; contributions from Aladdin [the asset management firm's tech platform]; and contributions from selective, bolt-on acquisitions aimed at increasing BLK's presence in the alternative space to support the shares' premium valuation versus peers," wrote CFRA Research analyst Cathy Seifert in a July 15 note.
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