Meta partners with BlackRock: Here's what you need to know
Meta and BlackRock announced a $14 billion partnership to develop and own a new AI data center in El Paso, Texas. BlackRock will largely finance and own 80% of the facility, which will provide one gigawatt of compute capacity starting in 2028, with Meta leasing the entire campus. This strategy allows Meta to build its AI infrastructure and potentially enter the cloud computing market while sharing the significant financial costs.
CNBC's Julia Boorstin reported on a significant new deal between Meta and BlackRock to develop and own a $14 billion AI data center in El Paso, Texas. This facility is projected to provide one gigawatt of compute capacity starting in 2028. Under the terms of the agreement, funds managed by BlackRock will own 80% of the data center, financing $12.5 billion in debt, while Meta will retain 20% ownership and take on $1 billion in debt. Meta plans to lease the entire campus, allowing it to expand its AI infrastructure without bearing the majority of the cost and debt directly.
The deal illustrates Meta's strategic approach to manage the escalating costs of building out its AI capabilities and address investor concerns about its growing AI spending, which has seen its shares decline by 12% since its last earnings report. The company previously stated plans to spend $600 billion on data center buildouts, with analysts like Wells Fargo forecasting a substantial increase in capital expenditure for the coming year.
Mark Zuckerberg has previously indicated that entering the cloud computing market is "on the table" if Meta overinvests in compute capacity. This partnership with BlackRock is presented as an example of how Meta aims to minimize costs while expanding its compute power, potentially paving the way for a new revenue stream through an AI cloud business. Reports also suggest Meta might strike a $10 billion deal with Anthropic to provide compute services.