Story Stocks^®

Meta Platforms (META) announced a major joint venture with Blue Owl Capital (OWL) to develop and own the Hyperion data center campus in Louisiana, marking a key milestone in META’s AI infrastructure expansion strategy. Funds managed by OWL will own an 80% interest, while META will retain 20%, with both parties contributing their respective share of the $27 bln required to build, operate, and power the facility.

• The Hyperion campus, expected to be completed by 2030, will span about 4 mln square feet, making it META’s largest data center to date.
• The facility will support and accelerate the training of META’s Llama large language model (LLM) and other AI workloads that underpin META’s growing suite of AI-powered tools and services.
• META’s AI investments are already paying off -- Q2 revenue rose 22% yr/yr, driven by higher ad impressions and increased average price per ad. AI systems like Advantage+, Andromeda, and GEM have significantly improved ad targeting and advertiser ROI.
• The joint venture structure reduces META’s upfront capital burden while transferring partial ownership and control to OWL, a tradeoff that allows META to preserve capital for other AI and product initiatives.
• The deal positions META competitively in the global AI infrastructure race, following Google’s (GOOG, GOOGL) recent $15 bln data center investment in India and OpenAI’s $1 trillion+ compute capacity agreements.

Briefing.com Analyst Insight:

META’s joint venture with OWL represents a savvy balance between growth and capital discipline. By partnering with an experienced infrastructure investor, META secures the funding and expertise needed to execute one of the largest data center projects ever undertaken while keeping its balance sheet flexible. The move underscores META’s commitment to scaling its AI capabilities, particularly around Llama and its next-generation ad platforms, without stretching resources thin. While META sacrifices some control over the project, the long-term strategic payoff -- faster AI model training, improved ad efficiency, and sustainable infrastructure growth -- appears well worth the trade. In the broader AI arms race, this partnership helps ensure META remains a formidable contender alongside GOOG, Microsoft (MSFT), and OpenAI.