TLDRs;
- Meta sharply increased its El Paso AI data center investment, triggering investor concern over rising capital intensity.
- The $10 billion project aims to deliver 1GW capacity and expand Meta’s long-term AI infrastructure footprint.
- Energy sourcing debates, including possible natural gas use, are fueling local and regulatory scrutiny.
- Despite AI expansion, Meta continues cost-cutting across divisions while balancing massive infrastructure spending.
Meta Platforms (META) saw its stock slide nearly 8% after the company dramatically raised its planned investment for a major AI data center project in El Paso, Texas. What was initially a $1.5 billion project has now expanded into a massive $10 billion commitment, signaling a far more aggressive push into artificial intelligence infrastructure than investors had anticipated.
The facility, expected to come online in 2028, is designed to deliver up to 1 gigawatt of computing capacity. While the expansion strengthens Meta’s long-term position in the AI race, markets reacted negatively to the scale and cost of the investment surge, interpreting it as a significant increase in capital expenditure pressure.
Texas AI Hub Expands Rapidly
The El Paso site is set to become one of Meta’s most important infrastructure hubs in the United States. The company confirmed that the project will generate approximately 300 permanent jobs once operational, while also requiring more than 4,000 construction workers during peak development phases.
Meta already operates 30 data centers globally, including several under development, and the Texas facility will be its third in the state. The company emphasized that the expansion reflects growing demand for AI computing power, as models and services require increasingly energy-intensive infrastructure.
However, the scale of the investment has raised concerns among investors about long-term profitability, especially as Meta does not operate a standalone cloud computing business to offset infrastructure costs.
Clean Energy Promises Face Scrutiny
Meta has highlighted its commitment to sustainability, stating that the El Paso facility’s electricity usage will be matched with 100% renewable energy. The company also plans to add more than 5,000 megawatts of clean power capacity to the regional grid and deploy a closed-loop liquid cooling system to reduce water usage.
Despite these claims, energy sourcing plans have sparked controversy. Local utility filings suggest that El Paso Electric is seeking approval for a 366-megawatt natural gas plant, which could be tied directly to the data center for several years. The proposal has drawn criticism from community stakeholders who argue it conflicts with earlier discussions centered on renewable energy commitments.
Meta will spend more than $10 billion to develop a data center in El Paso, Texas, a jump from prior projections and the latest in a series of major investments focused on the infrastructure needed to support its AI ambitions https://t.co/x3RCoTwLgR
— Bloomberg (@business) March 26, 2026
Meta is also backing eight water-related projects in Texas, including partnerships with nonprofit organizations focused on water access and conservation. Still, questions remain over the environmental trade-offs of scaling such a large AI infrastructure project.
Rising Costs and Local Pushback
The broader economic and political environment surrounding the project is also becoming more complex. Reports indicate that Meta’s data center benefits from significant tax incentives, including an estimated 80% property tax abatement over 35 years, raising questions about long-term public value.
At the same time, Meta is reportedly reducing costs in other parts of its business, with layoffs affecting recruiting, sales, global operations, and its virtual reality division. This contrast between aggressive infrastructure spending and internal cost-cutting has fueled investor uncertainty.
The situation in El Paso reflects a wider trend: communities across the United States are increasingly scrutinizing large-scale data center projects due to their high energy demand, water consumption, and reliance on local infrastructure. As regulatory oversight increases, analysts warn that project timelines and costs could continue to rise.
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