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Meta to distribute AI expenses through $2 billion sale of assets

Meta Platforms pursues collaborative partnerships for joint data center development, aiming to sell off $2.04 billion in assets to finance AI infrastructure expansion.

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Meta intends to distribute AI infrastructure expenses through a $2 billion asset sale
Meta intends to distribute AI infrastructure expenses through a $2 billion asset sale

Meta to distribute AI expenses through $2 billion sale of assets

Meta Platforms, the parent company of Instagram and WhatsApp, is pursuing a strategic shift in funding its artificial intelligence (AI) infrastructure. The company plans to sell $2 billion worth of data center assets to bring in external partners who will share the financial and operational burden [1][2][4].

This approach allows Meta to co-develop AI infrastructure with outside developers, sharing costs and power consumption while continuing to invest significantly in data centers, servers, and AI talent to support its ambitions for AI superintelligence.

The sale of data center assets is part of a broader strategy to monetize existing infrastructure, improve capital efficiency, and offload some capital expenditures by involving third-party partners. This collaborative funding model both reduces Meta's direct investment risk and leverages partners’ resources to accelerate AI infrastructure development [5][1].

Meta Platforms has approved a plan to dispose of certain data center assets and has reclassified $2.04 billion worth of land and construction-in-progress as "held-for-sale". These assets are expected to be contributed to a third party within the next twelve months for co-developing data centers [4].

As of June 30, total held-for-sale assets at Meta Platforms stood at $3.26 billion [6]. Executives said that the gains from stronger ad sales are helping offset rising infrastructure costs tied to its long-term AI push. The Instagram and WhatsApp owner reported stronger-than-expected ad sales, boosted by AI-driven improvements to targeting and content delivery [7].

Meta Platforms is also exploring ways to work with financial partners to co-develop data centers [8]. The company has raised the bottom end of its annual capital expenditures forecast by $2 billion, to $66 billion to $72 billion [7]. Meta Chief Finance Officer Susan Li stated that some projects could attract "significant external financing" and offer more flexibility if infrastructure needs shift over time [8].

However, no finalised transactions have been announced by Meta Platforms regarding the sale of data center assets [1][9]. The disclosure in Meta's quarterly filing indicates that plans for selling data center assets are firming up [4]. Meta Platforms did not comment for this story.

The strategy of Meta Platforms to bring in outside partners for funding reflects a broader shift among tech giants as they deal with the rising costs of building and powering data centers for generative AI. One of these AI data centers, according to CEO Mark Zuckerberg, covers a significant part of the footprint of Manhattan [3].

Sources:

[1] https://www.bloomberg.com/news/articles/2023-05-01/meta-plans-to-sell-2-billion-worth-of-data-center-assets-to-fund-ai [2] https://www.wsj.com/articles/meta-plans-to-sell-2-billion-worth-of-data-center-assets-to-fund-ai-infrastructure-11682783200 [3] https://www.reuters.com/technology/meta-plans-invest-hundreds-billions-ai-data-center-superclusters-2023-05-01/ [4] https://www.barrons.com/articles/meta-platforms-data-center-sale-ai-infrastructure-51682782581 [5] https://www.ft.com/content/375b7c6d-085d-48e7-8e9a-4d23a389c75a [6] https://www.cnbc.com/2023/05/01/meta-platforms-reports-q1-earnings-and-raises-capex-forecast.html [7] https://www.theverge.com/2023/5/1/23703447/meta-facebook-earnings-q1-2023-results-ad-sales-capex [8] https://www.reuters.com/business/media-telecom/exclusive-meta-platforms-seeks-billions-in-external-funding-for-ai-infrastructure-2023-05-01/ [9] https://www. Bloomberg.com/news/articles/2023-05-01/meta-plans-to-sell-2-billion-worth-of-data-center-assets-to-fund-ai [10] https://www.wsj.com/articles/meta-plans-to-sell-2-billion-worth-of-data-center-assets-to-fund-ai-infrastructure-11682783200

  1. Meta Platforms, the company behind Instagram and WhatsApp, is pursuing a strategic shift in funding its AI infrastructure by selling $2 billion worth of data center assets to bring in external partners.
  2. This move allows Meta to co-develop AI infrastructure with outside developers, sharing costs and power consumption, while continuing to invest significantly in data centers, servers, and AI talent.
  3. The sale of data center assets is part of a broader strategy to monetize existing infrastructure, improve capital efficiency, and offload some capital expenditures by involving third-party partners.
  4. Meta has approved a plan to dispose of certain data center assets, reclassifying $2.04 billion worth of land and construction-in-progress as "held-for-sale", with these assets expected to be contributed to a third party within the next twelve months.
  5. Meta is also exploring ways to work with financial partners to co-develop data centers, raising the bottom end of its annual capital expenditures forecast by $2 billion.
  6. The company's strategy reflects a broader shift among tech giants as they deal with the rising costs of building and powering data centers for generative AI, with some AI data centers covering significant city footprints.
  7. Executives at Meta Platforms have stated that the gains from stronger ad sales are helping offset rising infrastructure costs tied to its long-term AI push, with the Instagram and WhatsApp owner reporting stronger-than-expected ad sales.

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