Meta Boosts Texas AI Data Center Investment to $10 Billion

Edgen Stock·Mar 26 2026, 19:23

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Key Takeaways

Meta is dramatically escalating its artificial intelligence ambitions by increasing its investment in a West Texas data center to $10 billion. This more than sixfold spending boost signals a strategic reallocation of capital away from its metaverse projects and toward building the core infrastructure needed to compete in the AI race.

$10 Billion AI Bet: Meta raised its commitment for the El Paso data center from an initial $1.5 billion, targeting 1 gigawatt of capacity by 2028.
Pivoting from Metaverse: The investment coincides with job cuts in divisions like Reality Labs, which previously incurred significant losses, as the company funnels resources into AI.
Investor Scrutiny: With its stock down 16% for the year, Meta's massive spending faces pressure as it lacks a public cloud business to offset the projected $135 billion in annual capital expenditures.

Meta Increases El Paso AI Data Center Bet to $10 Billion

Meta announced on March 27 that it will increase its investment in its El Paso data center to $10 billion, a more than sixfold expansion from the $1.5 billion initially planned in October. The facility is a cornerstone of the company's aggressive push into artificial intelligence, with a goal to reach 1 gigawatt of computing capacity by its completion in 2028. The project will require over 4,000 construction workers at its peak and is expected to create 300 permanent jobs.

Investment Funded by Cuts to Metaverse and Other Divisions

This massive capital outlay for AI infrastructure is being funded by a strategic pivot away from other areas, most notably the company's metaverse ambitions. The spending increase comes as Meta executes hundreds of layoffs across its Reality Labs, recruiting, and sales divisions. This restructuring highlights a clear shift from the metaverse unit, which has accumulated tens of billions in losses, toward competing with rivals like Google and Microsoft in the capital-intensive AI sector.

Wall Street Questions Strategy as Stock Slides 16%

Meta's enormous spending on proprietary infrastructure is under intense scrutiny from investors. Unlike competitors Amazon, Microsoft, and Google, Meta does not have a public cloud business to help monetize its data centers externally. This makes its projected annual capital expenditures of up to $135 billion a direct cost for its own products, a gamble that has contributed to its stock falling 16% year-to-date. To mitigate operational risks and local backlash over resource consumption, the company has committed to using a liquid-cooled, closed-loop water system and funding water restoration projects in the region.