Meta, BlackRock team up to develop $14B El Paso data centre

Meta Platforms and asset manager BlackRock announced on Tuesday a venture to develop and operate a data center campus in El Paso, Texas.

The project is expected to cost about $14 billion in development.

The partnership comes as technology companies accelerate spending on artificial intelligence infrastructure.

The growing scale of investment in AI data centers has pushed major technology companies to seek outside capital.

Firms are also turning to debt markets to help fund projects that require tens of billions of dollars in investment.

Under the agreement, funds managed by BlackRock will take an 80% ownership stake in the venture.

Meta will retain the remaining 20% stake.

A portion of BlackRock's investment will be financed through $12.5 billion in debt.

META will also receive a $1 billion distribution as part of the transaction to align ownership between the partners.

Meta to contribute land and construction assets

Meta will contribute land and construction assets already under development.

The company said those assets are worth about $2.3 billion.

BlackRock, meanwhile, will make a cash contribution of about $4.9 billion, according to the company.

The transaction provides a new funding structure for Meta's ongoing expansion of its data center network.

It also highlights the growing role of large asset managers in financing AI-related infrastructure projects.

Morgan Stanley & Co and JP Morgan Securities served as financial advisors to Meta in connection with the transaction.

The El Paso campus is designed for 1 gigawatt of compute capacity

Meta had previously said it was developing a data centre project worth more than $10 billion in El Paso.

The site is located near the Texas-New Mexico border.

The El Paso campus is among 28 data centres that Meta has either operating or under construction in the United States.

Construction on the campus is already underway.

The facility is designed to provide 1 gigawatt of compute capacity.

The company said this capacity will be essential for its artificial intelligence technologies.

It will also support Meta's core business.

Operations at the El Paso campus are expected to begin in 2028.

The scale of the project reflects Meta's broader push to expand its infrastructure for AI.

The company is building multiple gigawatt-scale data centres across the United States.

Meta plans major AI infrastructure investment

Meta has said it plans to invest $600 billion in building data centres by 2028.

The company has linked the investment to its goal of accelerating work on personal superintelligence.

Meta expects its AI efforts could support new sources of cash flow.

Among the areas highlighted by the company are the Meta AI app, image-to-video advertising tools and smart glasses.

Meta is also developing other large-scale data center projects in the US.

One such project is located in rural Louisiana.

Meta expects the facility to eventually expand to 5 gigawatts of compute capacity.

The investment in the Louisiana project is expected to rise to more than $50 billion.

The project is part of Meta's wider effort to build the computing infrastructure needed to support its AI ambitions.

Investors scrutinize AI expansion costs

Meta's aggressive spending on AI infrastructure has also drawn attention from investors.

Shares of Meta have fallen about 10% so far this year.

Investors have been scrutinizing the costs associated with the company's AI expansion.

The company is scheduled to report its second-quarter results on July 29.

The results will provide investors with an update as Meta continues to commit significant capital to data centers and AI infrastructure.

The partnership with BlackRock represents another step in Meta's effort to fund its infrastructure expansion.

BlackRock-managed funds will hold the majority stake in the El Paso venture, while Meta will retain a minority ownership position.

The $14 billion project is expected to become operational in 2028.

Until then, construction will continue as Meta expands its data centres footprint and builds capacity to support its artificial intelligence technologies and core business operations.