Meta, BlackRock partner on $14 billion El Paso data center venture
Meta and BlackRock have announced a $14 billion joint venture to develop and operate a data center campus in El Paso, Texas, slated for completion by 2028. This partnership allows Meta to expand its AI infrastructure and potentially offer cloud computing services, while BlackRock finances the majority of the project's debt. The deal addresses concerns about Meta's high AI spending and rising financing costs.
Meta and BlackRock have entered into a new deal to develop and operate a 1-gigawatt data center campus in El Paso, Texas, with an estimated cost of $14 billion. This venture, expected to be operational by 2028, illustrates Meta's strategy to build out its AI infrastructure and mitigate costs.
Under the agreement, funds managed by BlackRock will own 80% of the project, providing $12.5 billion in debt financing, while Meta will retain 20% ownership and assume $1 billion in debt. Meta will lease the entire campus, gaining access to significant computing power to fuel its own AI models and potentially expand into the cloud computing market, a prospect CEO Mark Zuckerberg has previously mentioned.
The deal structure aims to alleviate investor concerns regarding Meta's substantial AI spending, especially given a 12% drop in shares since its last earnings report. The rising cost of finance is also a factor, with lenders reportedly demanding higher yields on bonds for this project compared to a similar one last year. Meta plans to spend up to $145 billion this year, with Wells Fargo forecasting a jump to $247 billion in CapEx next year.
Mark Zuckerberg is expected to highlight this partnership as an example of how Meta is minimizing costs and planning to monetize its AI compute capabilities, with potential further announcements about launching an AI cloud business.