Meta's $27 Billion AI Risk Hides Off Balance Sheet
Social networking and AI company Meta Platforms Inc. (META, Financials) is using joint ventures to help fund some of its enormous data-center buildout, keeping some of the related debt off its balance sheet.One is Hyperion, Meta's data-center facility in Louisiana. The project is in a venture with $27 billion of development expenditures and is owned 80% by Blue Owl Capital funds and 20% by Meta. Meta will lease the completed facilities and provide a residual-value guaranty on some of the project's future value.The corporation utilized a similar strategy for a data-center project in El Paso with BlackRock valued at approximately $14 billion, with about $12.5 billion of loan financing and more guaranties. The frameworks let Meta spread the initial finance load as it ramps up spending on AI infrastructure.The danger is that Meta could still be on the hook financially if the value of those assets falls drastically, or if those endeavors demand alternative accounting treatment down the line. That makes the financing structure, combined with Meta's already elevated capital-spending intentions, something for investors to watch.
