Power and electrical equipment companies moved higher in early trading after The Information reported Tuesday evening that Meta Platforms is in discussions to build a new artificial intelligence data center campus that "would dwarf anything the company has done to date" and be the largest project of its kind, with costs potentially exceeding $200 billion.
A person familiar with the plans said Meta has been speaking with developers about potentially opening the data center campus in states including Louisiana, Wyoming, or Texas, adding senior executives have already toured potential sites.
On Meta's latest earnings call, META CEO Mark Zuckerberg said the social media company plans to invest "hundreds of billions of dollars" in AI infrastructure "over the long term," without elaborating.
Like Amazon, Microsoft, and Google, Meta has aggressively increased capital expenditures to expand AI data centers, raising its capex to between $60 billion and $65 billion, nearly 70% higher than last year. The company has not provided details on whether the new project will begin this year.
"Meta's proposed new data center campus, which hasn't previously been reported, would be several times larger than a new AI data center in Louisiana that CEO Mark Zuckerberg discussed last month, which he implied would be about four miles long," The Information noted.
The people said that Elon Musk's xAI data center in Memphis, Tenn, considered one of the world's largest AI supercomputers, prompted Zuckerberg and Meta executives to expedite data center expansion plans.
Since the launch of MSFT-backed OpenAI's ChatGPT in 2022, AI Capex in data center spending has erupted, but a report earlier this week from TD Cowen suggested MSFT began canceling data center orders. However, it "strongly refuted" the Cowen report. US tech firms are also wrestling with 'DeepSeek' fears, essentially more efficient AI models that require less data center processing, which brings us to this...
The whole "Capex to the Sky" narrative for AI data centers among Mag7 companies is in jeopardy. However, big tech firms like Meta continue to push back against this bearish narrative by raising their capex projections...
... keeping the bubble alive.