BlackRock and Microsoft Copilot Deal May Disrupt Index Investing Models

What if the future of index investing isn’t as passive as everyone thinks?

BlackRock and Microsoft’s new $100 billion partnership to build AI infrastructure isn’t just a story about data centers. It signals a deeper shift in how the financial system allocates capital and measures value. The ripple effects could reach all the way into how index funds are built, and what they even represent.

This is a challenge to the idea that the market runs on autopilot.

A New Type of AI Megafund

At the heart of this shift is the Global AI Infrastructure Investment Partnership, a major investment effort led by Microsoft and BlackRock, with backing from Global Infrastructure Partners and MGX. The initial $30 billion funding target is already one of the largest AI-related investment moves to date. But the goal is to eventually reach $100 billion, with much of that going toward building and powering next-generation data centers.

AI models need a staggering amount of computational power. That means more servers, more cooling, more storage, and much more energy. The bottleneck right now is physical infrastructure.

This partnership is stepping in to solve that problem. But by doing so, it’s not just building a foundation for AI tools; it’s shaping which companies and sectors will lead the next phase of economic growth.

Why This Matters for Index Investors

Index funds have traditionally followed a simple principle: track the market. They reflect the performance of a group of companies based on rules like market cap or sector weighting. But those rules only work if the market itself stays broadly diversified and balanced.

AI, however, is concentrating value in a few areas:

• Tech firms that own or build AI tools
• Chipmakers with the hardware needed to train models
• Cloud providers running the infrastructure
• Energy companies powering the growth

When a handful of companies dominate those roles, they also end up dominating the indexes. That concentration raises some real questions. Are you really getting broad exposure when the same names keep climbing to the top of every index? And what happens when those names are directly shaped by the strategic choices of firms like Microsoft and BlackRock?

Rethinking Passive Exposure

BlackRock has long been known for its passive investing strategy. But this fund doesn’t follow the market; it’s trying to define it.

That introduces a kind of feedback loop:

• Major players invest in infrastructure
• That infrastructure enables faster AI growth
• AI growth boosts the same companies that invested early
• Those companies gain more weight in index funds
• Passive investors end up more exposed to AI, whether they choose it or not

It’s a shift from neutral capital allocation to directional influence, and that creates a gray area. Indexes are supposed to reflect the economy. But what if they’re also being shaped by the very firms building their foundation?

Traditional Index vs AI-Driven Influence

Category	Traditional Index Investing	Emerging AI-Driven Influence
Capital Movement	Follows market performance	Shapes market performance
Asset Diversification	Sector-spread, low concentration	High concentration in AI & tech
Role of Infrastructure	Minimal impact	Direct driver of returns
Investor Strategy	Passive exposure	Indirect exposure to strategic bets
Return Influences	Tied to economic growth	Tied to infrastructure dominance

Microsoft’s Copilot Ecosystem and Strategic Benefits

Microsoft’s Copilot tools rely heavily on cloud computing. Those tools are only as effective as the infrastructure behind them. This is why Microsoft’s involvement in building data centers isn’t just about scaling their own AI; it’s about creating the environment that makes their ecosystem indispensable to businesses.

The more tightly Microsoft integrates AI into everyday software, the more their tools drive demand for computing power. And the more computing power they help fund, the better their tools perform. That cycle puts them in a strong position to shape how productivity, enterprise software, and AI-driven decisions work across industries.

For index investors, this means companies like Microsoft may continue gaining weight in major funds, not because they’re just “performing well,” but because they’re building the rails the rest of the digital economy is forced to run on.

The Energy Factor: Quiet but Critical

It’s easy to focus on data centers and AI chips, but energy is the real engine underneath all of this. AI tools are incredibly power-hungry. Running them at scale requires far more than just cloud access; it needs real, physical energy production and distribution.

That’s why a large part of this $100 billion partnership is aimed at energy infrastructure. We’re talking about new power plants, clean energy grids, and massive cooling systems. This isn’t just about keeping up with tech demand. It’s about owning the very systems that control the pace of innovation.

For investors used to thinking in terms of digital exposure, this brings physical assets back into focus. Energy becomes a competitive advantage. That’s a mindset shift the index world isn’t used to yet.

Where the Index Investing Model Gets Stretched

The idea behind passive investing is that the market reflects a wide and healthy mix of companies. But in a world where AI and energy dominate, and just a few companies control the infrastructure, the index becomes much more concentrated.

This makes traditional diversification less effective. You’re getting exposure, yes, but not as broadly as you might think.

That’s where it becomes more important to understand what you’re really buying. If your fund is heavily weighted toward a few infrastructure-heavy tech firms, then your portfolio is more dependent on that sector than you may realize.

This shift in exposure isn’t always visible on the surface. Indexes may still carry a range of sectors, but the performance may be driven by just a few dominant companies shaping the AI economy.

Digital Parallels in Other Markets

This kind of infrastructure-led control isn’t entirely new. We’ve seen similar trends in other digital markets. For example, in cryptocurrency trading online, infrastructure plays a major role in who succeeds. From who controls blockchain validation to who maintains liquidity pools, early builders in the crypto space ended up owning significant influence over how the ecosystem developed.

The same pattern is starting to unfold in AI. Whoever builds the power grid and server farms will also end up shaping how innovation is monetized. And that influence may not be immediately visible on the balance sheet, but it will show up in market positioning, long-term growth, and investor exposure.

So What Should Investors Watch Now?

It doesn’t mean abandoning index investing. But it does mean taking a closer look at what’s under the hood.

Here’s what to keep an eye on:

Concentration creep 

Indexes may still look diversified, but returns might be driven by a small group of infrastructure-dominant firms.

Strategic capital shifts 

Major players like BlackRock aren’t just investing. They’re shaping industries. That influence carries weight in index performance.

Changing definitions of exposure 

A broad-market fund might no longer offer the variety it used to if tech infrastructure continues pulling ahead.

This new landscape calls for more awareness, not just in what indexes you hold, but how those indexes are constructed, and who is influencing their future. Whether you’re investing directly or through an index trading broker, it helps to understand which sectors are truly driving the growth behind the numbers.

The Next Phase of “Passive” Might Not Be Passive at All

We’re entering a different era. The companies building AI infrastructure are not only powering technology, they’re quietly guiding financial markets. As data centers and energy systems become more central to global growth, the lines between tech leadership and financial influence start to blur.

For investors who rely on index strategies, the assumption of neutrality may no longer hold. The indexes themselves are starting to reflect deep, strategic moves, not just market behavior.

So while passive investing isn’t going anywhere, its foundations are shifting. The real story isn’t just in the tickers or the charts. It’s in who’s building the systems that everything now runs on.