Meta Platforms and BlackRock will jointly build a 1-gigawatt artificial intelligence data center in El Paso, Texas. BlackRock-managed funds will own 80% of the venture, and Meta will lease the campus once construction wraps in 2028.

The companies announced the deal Tuesday, shifting Meta’s infrastructure costs off its own balance sheet and onto private investors. Meta will contribute land and assets already under construction, while BlackRock funds the buildout in cash and debt.

Financing Splits Risk Between Meta and BlackRock

Under the agreement, BlackRock-managed funds and Meta will fund the roughly $14 billion project according to their 80/20 ownership split. Meta will hand over land and construction-in-progress assets worth about $2.3 billion. It will then collect a separate $1 billion payout to balance the ownership math. BlackRock will add its own $4.9 billion in cash. A further $12.5 billion in debt financing, raised separately, will cover the rest of BlackRock’s side of the deal.

Meta signed an initial four-year lease with options extending it toward 20 years. It also agreed to cover a shortfall up to $13 billion if campus value falls below a threshold. That guarantee shrinks over time.

“Building the infrastructure for superintelligence is key to making sure the benefits of this technology are distributed to everyone,” said Mark Zuckerberg, Meta founder and chief executive.

BlackRock chairman and chief executive officer Larry Fink framed the venture as a long-term infrastructure bet for both companies.

“We’re excited to partner with Mark and the Meta leadership team on the El Paso data center campus, which will create thousands of skilled jobs and help drive economic growth in the local community,” Fink said.

Deal Lands as Wall Street Questions AI Capital Spending

Meta unveiled the venture two days before reporting Q2 earnings under pressure over ballooning artificial intelligence spending. However, moving costs off Meta’s books mirrors a pattern already reshaping the industry. Morgan Stanley and other banks helped push the broader AI bond market past $570 billion this year. Data center financing is shifting toward private capital industrywide. Hyperscalers, the small group of giants running cloud-scale data centers, increasingly lean on outside investors to fund AI buildouts.

Meta separately entered talks in mid-July on leasing compute capacity to Anthropic in a deal worth up to $10 billion. That effort is part of a wider Compute push to rent out spare GPU capacity to other AI labs. Investors previously punished Meta’s stock over capex fears earlier this year, making off-balance-sheet structures like the BlackRock venture attractive.

The buildout could also ripple into decentralized compute markets. Tokens tied to decentralized AI compute networks route idle hardware toward AI workloads instead of hyperscaler data centers. Continued hyperscaler capex may still starve or validate that alternative supply model.

Meta’s stock traded near $593 Wednesday, down about 8% over the past week. Markets were bracing for its earnings report later in the day. Whether investors reward the El Paso venture will likely hinge on how Meta frames its AI returns after earnings land.

Source: BeInCrypto