OpenAI alerts parents to violent teen threats

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**SPEAKER_4** (1:26)
Meta is in early talks to lease some of its data centers to Anthropic in a deal worth up to $10 billion over two years.

**SPEAKER_5** (1:33)
Which you look at that and you have two organizations that are direct competitors. They're both actively trying to build the most capable artificial intelligence models available, and they are sitting across the table negotiating a hardware lease.
There's just an inherent tension there. We don't usually see two companies racing for the same exact market share agree to share their core logistics.

**SPEAKER_4** (1:56)
Right. So why would a company that generates its revenue primarily through targeted advertising hand over the keys to its custom built computing infrastructure to arrival?

**SPEAKER_5** (2:07)
Well, providing raw computing resources to external clients, that'd be an entirely new operational lane for Meta. They make the vast majority of their money selling ad space on screens. That is a software optimization problem. You keep users engaged with the feed, you serve them targeted content, you collect revenue. It's highly scalable and relatively low friction.

**SPEAKER_4** (2:27)
Yeah. But renting out physical server racks is heavy industry. You are acquiring massive tracks of real estate. You're negotiating with local governments for dedicated power substations, building out liquid cooling infrastructure. It's a completely different business model. You're moving from selling digital attention to managing physical supply chains.

**SPEAKER_5** (2:46)
Exactly.
Yeah. Managing service level agreements for external clients who need like 99.9 percent uptime requires a totally different corporate infrastructure than optimizing an ad algorithm. Because if a social feed goes down for 10 minutes, people just complain on another app.

**SPEAKER_4** (3:04)
But if a client's training cluster goes down for 10 minutes, it can corrupt a multimillion dollar training run. The stakes of the infrastructure are physical and immediate. Mark Zuckerberg actually brought this up directly on an earnings call. He told investors he feels requests to buy data center space almost every week. So he considers leasing out this hardware a viable option.

**SPEAKER_5** (3:22)
Which functionally turns Meta into a cloud services provider. That opens up a multi-billion dollar business line that operates independently of ad clicks.
Because when your balance sheet is strictly tied to advertising, you are entirely exposed to macroeconomic cycles.

**SPEAKER_4** (3:38)
Right. And compute leasing is a long-term contract business. The entities renting these servers need guarantees that they will be available for years.
That provides Meta with a recurring, predictable cash flow insulated from the volatility of the digital marketing sector. You trade the high margins of software for the stability of a utility provider.

**SPEAKER_5** (3:58)
The catalyst driving this shift, though, is the upfront price tag.
Meta expects to spend between $125 billion and $145 billion a single year on these data centers. That is an astonishing amount of capital to convert into physical infrastructure. And, well, it makes investors very nervous. They don't have an infinite tolerance for capital expenditure that doesn't immediately generate revenue.

**SPEAKER_4** (4:20)
Think of it like building a manufacturing plant so large, you're forced to rent out the spare conveyor belts just to cover your baseline utility bills.
You construct this massive facility because your own internal production lines demand an enormous footprint, but the operating costs are punishing. Leaving any section of that building idle actively damages your balance sheet.