Spending on AI by hyperscalers is expanding so dramatically that electricity supply is becoming part of the investment story. A pertinent example is Meta Platforms (NASDAQ:META) and its planned C$13 billion data center in Alberta, which would be the company’s first data center in Canada. The 1-gigawatt facility is expected to support the company’s growing AI operations, but powering a facility of that size requires its own strategy. Capital Power will initially supply 250 megawatts, while Meta has a long-term agreement with Pembina Pipeline’s planned natural gas-fired Greenlight Electricity Centre, which is expected to enter service in late 2030.
The project is also beginning to have an effect beyond Meta. Capital Power CEO Avik Dey told Reuters that several other prospective data-center developers are discussing electricity supply with the company, and he expects more U.S. hyperscalers to eventually build large facilities in Alberta. For META investors, however, the more immediate story is what Alberta says about the enormous infrastructure buildout behind the company’s AI ambitions.
A team of developers working in unison to create the company’s messaging application.
Bull Case
Meta isn’t building capacity without growth on the other side of the equation. Second-quarter revenue increased 28% year over year to $60.8 billion, while advertising revenue grew 27%. CEO Mark Zuckerberg said AI is already accelerating Meta’s core business while also supporting the development of new products and enterprise opportunities.
Against that backdrop, Alberta gives Meta another large source of computing capacity, with the planned facility set to initially provide 1 gigawatt of capacity, while holding the potential to scale to 1.8 gigawatts. The location also gives Meta access to some of the characteristics that make Alberta attractive to hyperscalers, which include abundant natural gas, available land and a cold climate that makes cooling data-center infrastructure more cost-efficient.
There may also be something important in Meta being the first major hyperscaler to commit at this scale. Dey described the project as a vote of confidence in Alberta and said multiple hyperscalers have been evaluating the province for roughly 18 months. More than 100 data-center projects have been proposed in Alberta, according to Reuters. That does not mean those projects will be built, but Meta has moved beyond evaluating the market and committed to a C$13 billion project.
Bear Case
The Alberta facility also illustrates the other side of Meta’s (NASDAQ:META) AI strategy, which includes enormous amounts of capital and electricity that are required before that computing capacity can generate a return. Meta spent $31.08 billion on capital expenditures, including principal payments on finance leases, in the second quarter alone, and now expects $130 billion to $145 billion of capex for 2026.
That spending is already showing up in cash flow. Meta generated $31.86 billion in operating cash flow during fiscal Q2, but free cash flow was only $784 million, compared with $8.55 billion a year earlier. The quarter does not establish what returns Meta will ultimately earn on its AI infrastructure, but it demonstrates just how capital-intensive the buildout has become.
Furthermore, Capital Power will provide 250 megawatts of electricity to the site until Pembina’s planned generation project comes online in 2030, which makes power availability another constraint. Alberta is allowing new data-center developers to build their own electricity sources as it attempts to maximize the amount of capacity available.
The model also carries political and community risks. A Pembina Institute report cited by Reuters warned that allowing data centers to use Alberta’s grid before their own generating capacity is operating could strain electricity supply and increase consumer costs. Separately, a July Angus Reid poll found that 68% of Canadians would oppose a large data center near their home.
Conclusion
The Alberta project makes the scale of Meta’s AI ambitions easier to grasp. This isn’t simply a matter of buying more chips: the company is securing gigawatts of computing capacity and arranging the electricity needed to keep it running. Meta’s core business remains in strong growth mode, with second-quarter revenue increasing 28% to $60.8 billion, even as infrastructure spending sharply reduced free cash flow.
Meta is committing to AI infrastructure at extraordinary scale. For investors, the unanswered question is whether the eventual returns from that capacity will justify the extraordinary amount of capital the company is committing to it.
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This article is originally published at Insider Monkey.
