By Rajwa Quasim
Meta Platforms and BlackRock, the world’s largest asset manager, have partnered to develop and operate a massive data center campus in El paso, Texas. The deal is valued at roughly $14 billion. Adding to Wall Street becoming a major financial backer of AI infrastructure.
As per the agreement announced on Tuesday, BlackRock managed funds will hold an 80% stake in the venture, while Meta will hold the remaining 20%. A portion of the investment by BlackRock will be financed through $12.3 billion in debt. Meanwhile, Meta will contribute land and construction assets worth $2.3 billion. Meta will also receive $1 billion in distribution to align ownership between the partners. It will lease the entire campus under an initial four-year agreement with extension possibilities.
The El Paso center, which is already under construction, is designed to deliver 1 gigawatt of computing capacity. It is expected to begin its operations in 2028. The project will be able to support Meta’s AI systems, artificial intelligence demand, and core business operations. This campus is one of 28 data centers that Meta is currently having in operation or under construction across the country.
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The joint venture with BlackRock “allows us to move faster and at greater scale,” Meta Chief Executive Officer Mark Zuckerberg said in the statement.
Earlier, Meta increased its projected annual capital spending to between $125 billion and $145 billion. This boom is driven by AI infrastructure and component pricing. So far, Meta shares have declined about 10% as investors weigh the costs associated with AI expansion. A fall of share is commonly seen in most of the tech giants that plan on investing in AI and data centers. Meta is scheduled to release its Q2 financial report on July 29.
“The scale of spending still raises valid questions about cash flow, future operating costs, and investment returns, particularly as Meta doesn’t (for now) have a large cloud business selling spare capacity to external customers,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
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The company said other intends to invest over $600 billion in data center construction by 2028 as it races to develop what it calls “personal superintelligence.” Meta is building several other gigawatt facilities as well, including a Louisiana project of 5 gigawatt with an expected investment of $50 billion which spans nearly 10 million square feet, though the deal is facing scrutiny regarding various aspects. Meta is also in talks to lease computing power to Anthropic that could be worth $10 billion over two years.
It is worth noting that there were 142 protests across 42 states earlier week against rapid buildout of data centers, which were coordinated by HumansFirst, co-founded by a former leader of the modern-day Tea Party.
It’s not just meta, Companies like Nvidia will also provide financial guarantee worth $250 billion to support OpenAI’s plan to lease a 10-gigawatt AI data center project being built by SoftBank’s energy division in Southern Ohio. Alphabet shares fell by 4% last week as earnings report showed the company’s plan to spend on AI.