Meta and BlackRock are set to develop a massive 1-gigawatt AI data center in El Paso, Texas, with an investment topping $14 billion. BlackRock’s funds will own 80% of this venture, shifting the financial burden away from Meta’s balance sheet. Meta will lease the campus when it's completed in 2028, marking a significant shift in how large tech companies finance their AI infrastructure.

How the Partnership Splits Costs and Risks

The project’s financing reflects an 80/20 ownership split between BlackRock-managed funds and Meta. Meta is contributing $2.3 billion worth of land and assets already under construction, plus it will receive a $1 billion payout to balance the deal. BlackRock brings $4.9 billion in cash, supplemented by $12.5 billion in debt financing secured separately to cover its share.

Meta has agreed to a four-year lease for the campus with options extending that to 20 years. If the campus’s value drops below a certain level, Meta has committed to covering up to $13 billion in shortfall, though this guarantee will decrease over time. This arrangement allows Meta to push costly infrastructure investments off its own books while maintaining operational control through leasing.

Wider Implications for AI Infrastructure Funding

The timing of this deal is notable, coming just days before Meta’s Q2 earnings report amid scrutiny over soaring AI expenses. The move mirrors a broader industry trend where hyperscalers increasingly rely on private investors to fund costly AI buildouts rather than using balance sheet capital. Morgan Stanley and others have propelled the AI bond market past $570 billion this year, reflecting strong demand for alternative financing models.

BlackRock’s CEO Larry Fink described the El Paso project as a “long-term infrastructure bet,” highlighting the economic benefits and job creation for the local community. Meanwhile, Meta's CEO Mark Zuckerberg emphasized the importance of infrastructure in enabling superintelligence technology benefits for everyone.

This material is informational and not intended as financial advice.