Meta Doubles Louisiana Data Centre Capacity as Cloud Strategy Takes Shape
The tech giant raises total Hyperion project investment above $50 billion while lifting full-year capital expenditure guidance, amid reports of a new cloud unit to sell excess capacity.
Meta Platforms has announced a significant expansion of its Hyperion data centre in Richland Parish, Louisiana, more than doubling the planned compute capacity from 2 gigawatts to 5 gigawatts. The move increases the total investment in the project beyond $50 billion, with construction having commenced in December 2024. The facility serves as a critical hub for training the company’s largest artificial intelligence models, and the scale-up underscores Meta’s commitment to infrastructure growth despite recent signals that it possesses surplus computing resources.
The announcement arrives shortly after reports emerged that Meta is establishing a dedicated cloud unit to sell spare computing power. Chief Executive Mark Zuckerberg previously indicated that entering the cloud services sector was under consideration, noting that external firms were approaching the company weekly to purchase API services or pay a premium for access to idle capacity. This strategic pivot aims to transform what might otherwise be a liability into a new revenue stream, potentially leasing capacity to other technology firms.
Financially, Meta continues to report robust top-line growth despite the heavy capital outlay. For the first quarter of fiscal 2026, revenue surged 33 per cent year-on-year to $56.3 billion, marking the fastest growth rate since 2021. The company lifted its full-year 2026 capital expenditure guidance to a range of $125 billion to $145 billion, citing higher component costs. Chief Financial Officer Susan Li noted that the increased spending reflects the rising price of hardware, even as the company simultaneously plans to purchase compute from providers such as CoreWeave and Nebius for its own internal use.
Market reaction has been mixed, with Meta’s stock underperforming the broader S&P 500 over the past 12 months due to investor concerns regarding the scale of AI spending. However, shares have recovered recently, rising 12 per cent over the last month. Analysts remain cautiously optimistic; Citizens JMP’s Andrew Boone and UBS’s Stephen Ju recently lowered their price targets, citing execution risks associated with rising computing needs, though both maintained positive ratings on the stock.
Despite the near-term headwinds, the consensus among Wall Street analysts remains a "Strong Buy," with a mean price target of $823.50. The forward price-to-earnings ratio of 22.4 times sits in line with the company’s five-year average, while the balance sheet remains strong with net debt of $5.59 billion against a market capitalisation of $1.72 trillion. If the cloud strategy successfully monetises the expanded Hyperion capacity, analysts view the infrastructure investment as a potential catalyst for earnings acceleration in fiscal 2027.
