Meta just moved its biggest new data centre off its own balance sheet, one day before earnings

Meta is building a one-gigawatt AI data centre in Texas that it will not own. The structure of that deal, and its timing, say more about the economics of the AI build-out than any earnings slide.

The Deal

Announced on July 28, the venture pairs Meta with BlackRock to develop a $14 billion, one-gigawatt artificial intelligence data centre in El Paso, Texas. The split is 80/20 — and not in Meta's favour. BlackRock-managed funds take 80 per cent ownership; Meta retains 20 per cent.

The mechanics are unusual enough to be worth setting out plainly. Meta contributes land and construction-in-progress assets worth roughly $2.3 billion, then receives a separate payout of about $1 billion to balance the ownership arithmetic. BlackRock contributes $4.9 billion in cash. A further $12.5 billion in debt financing, raised separately, covers the remainder of BlackRock's side.

When construction completes in 2028, Meta leases the campus back and runs its AI workloads on it.

What The Structure Actually Does

Strip away the joint-venture language and the transaction accomplishes something specific: it moves roughly $14 billion of infrastructure cost off Meta's balance sheet and onto private investors', while preserving Meta's access to the computing capacity.

A company that builds and owns a data centre carries the full capital cost on its own books, depreciates the asset over years, and absorbs the hit to free cash flow up front. A company that leases one from a majority owner converts that capital expenditure into an operating expense spread across the life of the lease. The compute is the same either way. The financial statements are not.

The Timing

The venture was announced on Tuesday, July 28. On Wednesday, July 29, Meta reported second-quarter results showing free cash flow down 91 per cent to $784 million, quarterly AI capital expenditure above $31 billion, and full-year capex guidance raised to as much as $145 billion. The stock fell roughly 10 per cent.

Announcing an off-balance-sheet infrastructure arrangement the day before disclosing a 91 per cent collapse in free cash flow is, at minimum, a decision about sequencing. It also indicates how acute the pressure has become: a company generating tens of billions in advertising profit is now structuring deals specifically to avoid carrying the cost of its own compute.

The Wider Pattern

Meta is not alone in reaching for outside capital to fund AI infrastructure. Nvidia is reportedly in talks to guarantee some $250 billion in lease and construction financing for OpenAI's 10-gigawatt Ohio campus — a backstop OpenAI needs because, as an unprofitable company, it cannot secure an investment-grade credit rating on its own. SoftBank's energy arm is developing that site.

The through-line is that the AI build-out has outgrown the balance sheets of even the companies driving it. The capital is now coming from asset managers, chipmakers and debt markets, structured through vehicles that keep the liabilities at arm's length from the technology companies whose products depend on them.

For Meta, the El Paso facility secures a gigawatt of computing capacity for 2028 without a $14 billion hole in the interim cash flow statements. Whether that counts as prudent financial engineering or as a warning sign depends largely on whether the AI revenue arrives before the leases come due.