Wall Street is taking center stage in financing the AI buildout. On July 28, Meta Platforms, Inc. (NASDAQ: META) and asset manager BlackRock, Inc. (NYSE: BLK) announced a venture to develop and operate a one gigawatt data center campus in El Paso, Texas. The project, costing about $14 billion in development, marks the emergence of a new financing playbook for the AI infrastructure boom.
The overwhelming cost of the AI infrastructure build out is prompting tech giants to go beyond self-funding, raising tens of billions of dollars in debt and tapping asset managers such as BlackRock for capital.
Last year, the tech giant spent $72.2 billion on capex, up roughly $30 billion from the year before. For 2026, it has projected capital expenditure between $125 billion and $145 billion, up from its prior forecast of $115 billion to $135 billion. According to Chief Financial Officer Susan Li, the increase related to higher component pricing and additional data center costs tied to AI infrastructure.
This brings us to the question: Does the deal meaningfully reduce the cost of Meta’s AI buildout?
How the $14 billion Venture Works
As per Meta Platforms, Inc. (NASDAQ: META), BlackRock-managed funds will take an 80% ownership stake in the venture, while the tech giant will retain the remaining 20%. A part of BlackRock’s investment will be financed through $12.5 billion in debt, while Meta will also receive a $1 billion distribution to align ownership.
Meta’s land and in-progress construction assets contribution will be worth about $2.3 billion, while BlackRock will make a cash contribution of about $4.9 billion. Meta will enter into lease agreements with the venture. This will allow it to secure computing capacity without directly funding and owning the entire campus itself.
The El Paso campus is expected to come online in 2028.
Could the Deal Ease Meta’s Funding Pressure?
It seems that the Meta-BlackRock deal will help Meta Platforms, Inc. (NASDAQ: META) ease some of its funding pressures. This is particularly true because the tech giant does not need to own and finance the entire $14 billion project itself. With the help of BlackRock, Inc. (NYSE: BLK)’s capital and debt financing, Meta will be able to preserve more cash for its AI chips, technical talent, and other AI infrastructure projects.
According to Meta founder and CEO Mark Zuckerberg, the partnership with BlackRock, Inc. (NYSE: BLK) will help Meta build data centers quickly and efficiently by combining its operational expertise with BlackRock’s infrastructure investment capabilities.
By leasing the entire campus from the venture under an initial four-year agreement, Meta will be able gain long-term access to compute infrastructure while sharing the upfront capital burden with institutional investors. There is also the option to extend the arrangement for up to 20 years.
The partnership with BlackRock also helps spread the financial risk while fast-tracking construction without placing the full burden on the company’s balance sheet. Overall, while the venture doesn’t make AI infrastructure cheaper, it makes Meta’s spending program financially manageable.
ALso, not only does this joint venture lowers Meta’s near-term cash funding requirements in comparison to a wholly owned facility, but also offers it the strategic flexibility it may need over time to adjust its AI investment strategy.
According to ratings firm Moody’s, Meta’s credit profile balances the investment needs to support the transition to an asset-heavy business model. There are robust demand expectations for AI compute that will support Meta’s impressive growth trajectory. However, risks also remain.
The Costs Have Not Disappeared
While the venture will help Meta in the long run, investors should not view it as a $14 billion reduction in Meta’s costs. The tech giant is only replacing the ownership burden, not making it vanish completely. According to Moody’s, Meta is expected to increase capital expenditures to around 55% of sales in 2026 and 2027, which will put a pressure on free cash flow generation.
Meta will lease the entire campus once construction is completed. Moody’s plans to evaluate how these lease liabilities will be treated when they are formally recognized on the financial statements. The risk, therefore, isn’t whether Meta can fund the current expansion, but whether it can generate sufficient returns.
Moody’s has also warned about inherent risks with such large-scale data center investments, such as extended payback periods and threat of technological obsolescence. Returns may also take years to materialize, it noted.
Hedge Funds Remain Bullish on Meta
Meta Platforms, Inc. (NASDAQ: META) remains one of the most widely held stocks among hedge funds. According to Insider Monkey’s database, 262 hedge funds held stakes in the company at the end of the first quarter of 2026, up from 256 in the previous quarter. On the other hand, BlackRock, Inc. (NYSE: BLK) was held by 79 hedge funds, compared with 78 in the previous quarter. The numbers for Meta imply how hedge funds remain bullish on the tech giant despite concerns about its rapidly rising AI infrastructure costs.
Meta’s relatively short interest also reflects how investors aren’t broadly against the stock. Short interest for the stock stands at 37.85 million shares, representing about 1.73% of the public float. Meanwhile, BlackRock has a short interest of approximately 2.10 million shares, or 1.38% of its public float. Short interest remains below 2% for both companies, implying how investors aren’t broadly betting against the company even as they scrutinize Meta’s rising infrastructure commitments.
Ultimately, the venture helps improve Meta’s financial flexibility, but its long-term value will depend on whether the company can convert its expanding AI capacity into sufficient revenue and earnings growth.
While we acknowledge the risk and potential of META as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than META and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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