By Jaspreet Singh
July 28 (Reuters) – Meta Platforms and the world’s largest asset manager BlackRock on Tuesday announced a venture to develop and operate a data center campus in El Paso, Texas, a project that would cost about $14 billion in development.
The race to build out AI infrastructure has prompted tech giants to turn to debt sales worth tens of billions of dollars and seek external capital from fund managers such as BlackRock due to an unprecedented scale of investment.
Meta said BlackRock-managed funds will take an 80% ownership stake in the venture, with Meta retaining the remaining 20%. A portion of BlackRock’s investment will be financed through $12.5 billion in debt. Meta will also receive a $1 billion distribution to align ownership.
Meta will contribute land and in-progress construction assets worth about $2.3 billion, while BlackRock will make a cash contribution of about $4.9 billion, the company said.
The Facebook-parent will enter into lease agreements with the venture, allowing it to secure computing capacity without directly funding and owning the campus itself, at a time when investors are concerned if data center investments will pay off.
Borrowing by tech companies has hit a fever pitch, with BofA Global Research saying that AI-related bond issuance reached $270 billion by early July this year, nearly doubling what was raised in all of 2025.
SCALE OF SPENDING RAISES QUESTIONS
Shares of Meta have fallen about 10% so far this year, as investors are scrutinizing the costs of AI expansion. The company is scheduled to report second-quarter results 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.
Media reports, including by Reuters, said Meta is in talks to lease computing power to Anthropic in a potential deal worth up to $10 billion over two years.
Meta earlier said it was building an over $10 billion data center project in El Paso, near the Texas-New Mexico border, among 28 data centers it has in either operation or under construction in the U.S.
The El Paso data center campus, already under construction, is designed to provide 1 gigawatt of compute capacity, essential for Meta’s AI technologies and supporting its core business. Operations are expected to commence in 2028.
Meta has said it plans to invest $600 billion to build data centers by 2028, with an aim to fast-track work on personal superintelligence, which could help spin up new cash flows from the Meta AI app, image-to-video ad tools and smart glasses.
The social media giant is building several gigawatt-scale data centers across the U.S., including one in rural Louisiana, a project Meta expected to expand to 5 gigawatts of compute capacity, with investment increasing to more than $50 billion.
Earlier this year, Meta appointed Trump ally Dina Powell McCormick as president and vice chairman in a bid to drive partnerships with governments and investors for its AI projects. Along with other senior executives, she focuses on the company’s global fleet of data centers.
AI data center expansion has also faced 142 protests across 42 states earlier this month.
Morgan Stanley & Co and J.P. Morgan Securities served as financial advisors to Meta in connection with this transaction.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Devika Syamnath)
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