Bernstein Warning: Google and Blackstone Form Powerful Alliance, New Compute Power Players Like CoreWeave Face Long-Term Margin Squeeze

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The strategic alliance between Google and Blackstone is sending shockwaves through the computing power leasing market. This massive "frontal assault" by a cloud computing giant on emerging compute service providers may fundamentally reshape the competitive landscape and profit distribution in the AI infrastructure market.

On Monday evening, Google and Blackstone announced they would form a new joint venture, focusing on cloud computing services based on Google’s self-developed Tensor Processing Units (TPUs). Blackstone committed an initial investment of $5 billion, with plans to launch 500 megawatts of cloud computing capacity next year. After the news was released, the stock prices of "neocloud" companies—whose core business model is leasing chip computing power—came under pressure: CoreWeave and Nebius Group both fell about 4% in pre-market U.S. trading on Tuesday.

Bernstein analyst Madison Rezaei issued a clear warning: Although the scale of this deal is relatively limited, it marks the beginning of a "more serious offensive" by hyperscale cloud giants into this market and will exert continued pressure on the pricing power and profit margins of emerging compute service providers such as CoreWeave.

Limited JV scale, but significant strategic signal

In absolute terms, the initial size of this joint venture is not enough to pose an immediate threat to CoreWeave. Madison Rezaei pointed out that the planned 500 megawatt capacity by 2027 "is relatively small compared to CoreWeave’s expected scale next year," and therefore, in the near term, "is not an imminent issue."

However, Rezaei emphasized that the real significance of the deal lies in its strategic direction—it represents hyperscale cloud players “beginning to more seriously attack this market.” According to Google, the collaboration aims to provide customers with "more options and flexibility" to access cloud-based TPU resources. Meanwhile, Alphabet’s share price saw a slight pre-market rise on Tuesday, with Blackstone’s stock also climbing; the market holds an optimistic view on the prospects of the two leaders in this deal.

Pricing and profit margins under pressure, CoreWeave's transformation toughens

Bernstein’s core assessment directly targets the pain points of CoreWeave’s business model. Rezaei wrote in a research report that "increased competition will squeeze CoreWeave’s pricing room and profit margins on new contracts, and make its transition to more enterprise customers more difficult."

She further analyzed that in key areas such as capital costs, long-term profitability potential, and access to power resources, "the Blackstone-Google alliance should have advantages in all these aspects." This means CoreWeave will face systemic structural disadvantages in competing for market share against such a strong joint force. Currently, Rezaei maintains an "underperform" rating on CoreWeave stock.

Hyperscale giants are accelerating, new cloud business models face challenges

The structure of this joint venture clearly reflects the competitive logic of hyperscale cloud giants: Google provides TPU chips, software, and various services, while Blackstone supports infrastructure construction with its robust capital, forming a high degree of technical and financial complementarity between the two.

TPUs have become an important strategic asset for Alphabet, which has also signaled its intent to deepen its layout in proprietary chip development. For emerging service providers such as CoreWeave and Nebius, whose core business is leasing GPU computing power, the direct involvement of hyperscale giants equipped with in-house chip designs, ample capital, and mature customer networks means their space for differentiation will face sustained and long-term compression. As of press time, CoreWeave and Nebius have not responded to requests for comment.

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