How Private Credit Is Powering the AI Revolution

Meta is reportedly in talks to raise a staggering $29 billion, not from the public markets, but from private credit giants like Apollo Global Management and KKR. The purpose: to finance its all-in push into artificial intelligence. The move is the latest and one of the most dramatic signs that the AI arms race has become so colossally expensive that even the world's wealthiest tech companies are turning to Wall Street for new and creative ways to fund their ambitions, transforming private credit into the silent partner of the AI revolution.

Why is a company like Meta turning to private credit?

The simple answer is the astronomical cost of competing in AI. Building frontier AI models requires immense data center infrastructure. When Meta's own AI development, including its Llama 4 model, was perceived as lagging rivals, CEO Mark Zuckerberg initiated an aggressive, multi-front campaign to catch up. This includes spending heavily on talent and acquisitions, but most consequentially, on physical infrastructure.

In its last earnings report, Meta boosted its full-year capital expenditure forecast by as much as 10% to a range of $64 billion to $72 billion, citing the need for "additional data centre investments" to support its AI push. Raising $29 billion from outside investors allows Meta to pursue this massive build-out without having to fund the entire venture from its own balance sheet, splitting the risk and the cost.

Is this a new trend for Big Tech?

Yes, and it's rapidly accelerating. Meta is not the first to tap this well. The playbook was notably used last year when Intel struck an $11 billion deal with Apollo to finance its semiconductor fabrication plant in Ireland. OpenAI, the company at the heart of the generative AI boom, is also working with investors including Oracle and SoftBank on its "Stargate" project, a data center venture with a reported price tag of up to $500 billion. These deals signal a structural shift in how Big Tech finances its most capital-intensive projects.

How do these deals actually work?

Instead of taking on traditional corporate debt, these arrangements are highly structured financial maneuvers. The tech company typically places the assets—like a data center or a chip fab—into a separate legal entity, often a joint venture or a special purpose vehicle (SPV). Private credit firms then invest directly into this new entity. The Financial Times described the structure this way:

Such deals... are often structured as special purpose vehicles or joint ventures, where the asset managers take a large minority ownership share in the vehicle. The company contributes assets to the venture in exchange for the capital... that private investment firms provide. The deals are then highly structured, with income and cash flows from the projects divided between the asset manager and company.

In Meta's case, the talks involve raising approximately $3 billion in equity and another $26 billion in debt to fund the data centers, with the private credit firms becoming co-investors in the physical infrastructure itself.

What's in it for the tech companies?

The critical benefit is that this is off-balance-sheet financing. By structuring the deal through a separate joint venture, the massive debt taken on to build the data centers does not appear on Meta's primary corporate balance sheet. This is hugely important for a public company, as it avoids impacting its leverage ratios and potentially its credit rating. It allows the company to fund its gigantic AI ambitions without alarming public market investors who might be scared off by a sudden, massive increase in corporate debt. It's a way to de-risk moonshot-level spending.

What's in it for the private credit firms?

Private credit has become a behemoth, with firms like Apollo, KKR, and Blackstone managing trillions of dollars, much of it from large institutional clients like insurers and pension funds. These clients have a voracious appetite for stable, long-term, high-quality investments that can generate better returns than standard government or corporate bonds.

AI data centers are emerging as a perfect asset class for them. These are essential, industrial-scale pieces of "digital infrastructure" that, once built, will have a guaranteed, long-term tenant—in this case, Meta itself—providing a predictable stream of cash flow for years or even decades. It's a lower-risk way for them to get exposure to the AI boom by owning the "real estate" rather than betting on the more volatile tech startups. As the AI capex race continues to soar, the flow of capital from these private credit giants into the digital infrastructure that underpins it is only set to grow.

Reference Shelf:

Meta seeks $29bn from private credit giants to fund AI data centres (FT)

Intel and Apollo in $11 Billion Joint Venture for Chip Manufacturing Plant in Ireland (WSJ)

Why Is Meta Fueling the Frenzy for AI Talent and Acqui-Hires (ARPU)