Blackstone Invests $300 Million In AI Data Firm That Powers Elon Musk's xAI Supercomputer

Blackstone Inc. (NYSE:BX) is making a significant move in the AI sector with a $300 million investment in DDN, a company known for its expertise in data storage and analysis.

What Happened: The investment represents the first external funding for DDN, valuing the Chatsworth, California-based firm at $5 billion. Founded in 1998 by computer scientists Alex Bouzari and Paul Bloch, DDN provides computing equipment and software essential for managing data during AI model training and deployment, The Wall Street Journal reported on Thursday.

Initially serving government agencies and research organizations, DDN has shifted its focus as businesses increasingly adopt AI technologies. CEO Bouzari stated that Blackstone’s investment will help expand DDN’s business-customer base, making AI more cost-effective.

DDN’s technology is integral to major AI infrastructure projects, including the Colossus supercomputer by Elon Musk‘s xAI. The company is considered a strong competitor in the field and could potentially pursue an IPO in the coming years, sources suggest.

Blackstone’s investment strategy aligns with its broader AI focus, having previously acquired data-center operator QTS and engaged in significant deals with Digital Realty and AirTrunk. The firm has also supported CoreWeave in financing rounds backed by AI chips.

Why It Matters: The investment by Blackstone comes at a time when major tech companies are heavily investing in AI infrastructure. Recently, Microsoft Corp. announced plans to allocate $80 billion toward AI data centers for fiscal 2025. This move underscores the growing demand for computing power necessary for AI model training and deployment.

Furthermore, Blackstone’s strategic investments in AI-related companies, such as its acquisition of a stake in Citrin Cooperman Advisors LLC, highlight its commitment to expanding its presence in the AI sector. These investments are part of a broader trend among private equity firms to fuel growth in technology and advisory services.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.