Meta Platforms, Inc. (NASDAQ:META) has reportedly classified some of its artificial intelligence data centers as ‘pilot models’ to claim billions of dollars in federal research tax credits, potentially reducing the cost of its massive AI infrastructure push.
Meta’s AI Data Centers Under Tax Scrutiny
According to a New York Times report, Meta has described certain AI data centers to the Internal Revenue Service as "pilot models" involved in experimental work, allowing the company to claim the research and experimentation tax credit.
The tax incentive is intended to encourage companies to invest in research, including qualifying experimental projects and supplies.
Meta’s research tax credits reduced its tax bill by $3.9 billion in 2025, up from $2 billion in 2024 and $700 million in 2023, according to company filings cited by The Times.
However, the classification reportedly remains a gray area. Meta’s accountants have raised concerns that the IRS could challenge the treatment, according to people familiar with the company’s operations cited by the Times.
Meta did not immediately respond to Benzinga’s request for comment.
Nvidia Chips At the Center of the Spending
The tax claims reportedly involve chips Meta purchases for its AI data centers, including Nvidia Corp. (NASDAQ:NVDA) GPUs.
Meta has significantly expanded its relationship with Nvidia, agreeing earlier this year to purchase millions of chips as it races to build AI infrastructure.
The Times also reported that Meta’s auditor, EY, has promoted the tax strategy to other AI companies.
Meta spokesperson Andy Stone told the publication that the company has invested $200 billion in research and development over the past five years, including $57 billion in the last year.
The company uses tax incentives established by Congress to support domestic investment in research, technology and jobs, Stone stated.
AI Spending Raises Bigger Financial Questions
Meta’s enormous AI investments are already weighing on its finances. The company reported quarterly free cash flow of just $784 million, roughly $8 billion below the year-ago period.
Meta is among several major technology companies, including Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corp. (NASDAQ:MSFT) and Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), spending heavily on AI infrastructure.
Investors such as Michael Burry have warned that the spending could become problematic if AI demand fails to justify the massive investments.
Price Action: Meta shares closed at $725.18 on Wednesday, while its Thursday premarket price stood at $724.15, down 0.14%, according to Benzinga Pro.
According to Benzinga Edge Stock Rankings, Meta is in the 80th percentile for Momentum, with positive short-, medium- and long-term price trends.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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