TradingKey - Meta announces super data center with BlackRock, stock price rises instead of falling.

During pre-market hours on July 28, Eastern Time, Meta ( META) dropped a bombshell, announcing a partnership with global asset management giant BlackRock ( BLK) to jointly build a 1-gigawatt (GW) hyperscale AI data center campus in El Paso, Texas, with a total investment of approximately $14 billion. As of writing, Meta was up 0.52%, temporarily trading at $696.94.

Currently, the market is filled with concerns over the massive capital expenditures (CapEx) of tech giants, especially Google ( GOOG) and Tesla ( TSLA )'s earnings reports, which have exacerbated these worries. This has also made Meta cautious, leading it to release this news a day before its earnings report. This not only reduces market panic but also injects a shot of confidence into Meta's massive AI computing power empire, setting a tone of unwavering commitment to long-term AI investment.

Notably, Meta has adopted a brand-new strategy in the face of massive CapEx pressure. Reportedly, a fund managed by BlackRock holds an 80% stake in the joint venture, while Meta retains a 20% stake and serves as the campus's initial sole user. Through this "20/80" joint venture model, Meta can secure 1 GW of top-tier AI computing power in the future while avoiding placing the full trillion-level debt directly on its own balance sheet, significantly optimizing its financial leverage and free cash flow performance.

Simply put, Meta has managed to stay committed to its AI goals without triggering market panic, which is a major reason why its stock price rose slightly instead of falling, though it remains capped by the $600 threshold for now. Tomorrow (July 29) after-hours, Meta will release its latest quarterly earnings, which will determine whether it surges toward the $700 level or continues to slide toward the $500 mark. Meta stock price chart, Source: TradingView

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