Meta Platforms Takes on Massive Debt for AI, Wall Street Capital Costs Soar
Meta Platforms is now heavily dependent on Wall Street to fund its grand ambitions in artificial intelligence (AI) development. However, the move comes at a time when lenders are beginning to feel fatigued and selective.
This year’s wave of debt raisings by giant technology companies has triggered exhaustion among bond investors, ultimately pushing up the cost of capital across the industry. On Monday (27/7), investors demanded higher yields for bonds financing a new data centre project in El Paso, Texas, leased by Meta, compared with similar projects last year.
Concerns about a flood of AI-related debt are mounting, particularly after aggressive spending forecasts from Alphabet (Google) last week triggered a sell-off in technology shares. This has also pressured bond prices of other major companies such as Microsoft and Amazon.com in recent days.
According to Bank of America Global Research data, new bond supply from AI companies reached US$270 billion by early July. This figure is nearly double the total funds raised throughout 2025. Although investors are beginning to show signs of ‘indigestion’ towards new debt, the data centre boom appears set to continue generating more debt, albeit at a higher cost.
Meta executives reportedly told bankers and investment managers that they need to raise hundreds of billions of dollars to support the construction of AI infrastructure. Meta is currently in talks with investment firms such as Blackstone for additional funding. Meanwhile, Nvidia is also reported to be in discussions with OpenAI to provide around US$250 billion in financial backing to finance a giant data centre project in Ohio.
“The market is pricing in that the build-out will continue, just at a higher price,” said Neha Khoda, head of US credit strategy at Bank of America.
For years, Meta rarely borrowed thanks to its advertising business, which generates abundant cash flow. However, over the past nine months, its borrowing activity has surged sharply. Last October, Meta raised US$30 billion, followed by a new bond sale worth US$25 billion in April.
Meta has also employed creative strategies to keep its multi-billion-dollar debt from directly burdening the company’s balance sheet (off-balance sheet):
To attract investors, Meta has offered residual-value guarantees. These guarantees ensure bondholders are still paid if Meta chooses not to renew leases or terminates them early, allowing the projects to receive investment-grade ratings from S&P and Fitch.
This massive fundraising effort is led by a dedicated team called Meta Compute. The division is headed by Dina Powell McCormick (a former White House official and Goldman Sachs veteran), Daniel Gross, and Santosh Janardhan. They were assigned directly by Mark Zuckerberg to map out strategies for securing computing power on a massive scale.
The team works closely with Meta’s CFO, Susan Li, on financing matters. Powell McCormick has reportedly met with major Wall Street figures such as Larry Fink of BlackRock, Stephen Schwarzman of Blackstone, and Bruce Flatt of Brookfield to secure financial backing.
Although the cost of capital is rising due to extreme demand for capital—similar to the surge in semiconductor and building material prices—AI companies are currently choosing to pay higher interest rather than risk construction delays in the global technology race.