Meta's aggressive expansion into AI is fuelled by massive data centre investments, including a $27 billion facility in Louisiana. To finance this, Meta employs a joint venture structure, partnering with firms like Blue Owl Capital. This involves Meta leasing the data centre for up to 20 years, a move that keeps the construction debt off its balance sheet.
This approach hinges on assumptions about Meta's future revenue and the long-term viability of its AI investments. While it offers flexibility and less public scrutiny compared to traditional debt markets, analysts are questioning the sustainability of this financial strategy. Concerns arise around potential overcapacity and whether returns from AI products will justify the massive infrastructure spending, which could reach hundreds of billions of dollars. Some experts suggest the AI sector might be facing an investment bubble, with spending outpacing foreseeable returns.
Meta's CEO, Mark Zuckerberg, has stated that the company is committed to investing heavily in AI infrastructure to stay ahead in the rapidly evolving AI landscape. This includes investments in data centres, AI chips, and renewable energy sources.
