S&P Global Ratings revised Meta Platforms’ credit outlook to negative from stable on 30 October as it forecast free operating cash flow deficits of $39 billion in 2026 and $71 billion in 2027, Reuters reported. The credit rating agency acted after Meta’s third-quarter earnings, which put the scale of its AI infrastructure spending alongside a quarterly cash flow deficit.
Key points
- Meta retains its AA- credit rating, with a negative outlook.
- Meta expects capital expenditure of $135 billion to $145 billion for 2026.
- S&P believes Meta’s leverage could exceed its 1.0x threshold for the AA- rating as early as 2027.
- Reports differ on Meta’s planned stock sales: Reuters put them at $97.5 billion and CNBC at $95 billion.
Meta retains its AA- rating
The rating itself remains AA-, CNBC reported. S&P assigned it a negative outlook because of uncertainty over Meta’s capital expenditure and future cash flow. The agency also questioned how much revenue Meta can generate from its AI investments relative to peers that are spending heavily on data centres.
Meta reported a third-quarter free cash flow deficit of $2.12 billion and expects annual capital expenditure of $135 billion to $145 billion for 2026. Its long-term debt stood at $80.92 billion on 30 September. An earlier AI Affairs report covered a 7% fall in Meta shares as AI spending pushed quarterly cash flow negative.
Meta shares finished October down 15%, their worst monthly performance in four years, CNBC reported. After the earnings report, Meta shares fell 7% despite a revenue beat. The outlook revision brought scrutiny of the same spending programme from the credit market while leaving Meta’s current rating unchanged.
S&P sets a 1.0x leverage threshold
S&P said Meta has a more limited ability than its peers to monetise AI investment. The agency said it was unclear when revenue from those investments would make a material contribution greater than their rising costs over the next few years. Meta has introduced the Muse AI agent app and related foundation models, but S&P’s concern centres on the timing of revenue against spending.
The agency believes Meta’s leverage could rise above 1.0x as early as 2027, crossing S&P’s threshold for the AA- issuer credit rating. S&P said Meta’s leverage had risen from 0.1x in 2025, primarily because of its strategy of leasing data-centre capacity rather than issuing debt.
A Meta spokesperson told Reuters the company “respectfully disagree[s] with S&P’s assertion about Meta’s AI monetization capabilities”. The spokesperson said Meta saw product and business opportunities ahead that supported its credit profile. The company’s assessment differs from S&P’s view of how soon AI revenue can exceed its associated costs.
Naveen Sarma, S&P Global Ratings’ US media and telecom sector lead, said credit profiles would continue to weaken and cash flows would remain negative if capital expenditure stayed elevated and grew faster than the agency expected. Earlier in 2026, S&P lowered cloud computing company Oracle’s rating to BBB-, one notch above junk, because of its heavily leveraged balance sheet.
Meta’s planned stock sales draw differing figures
Reuters reported that Meta planned to sell $97.5 billion in stock to fund its AI infrastructure buildout. CNBC put the planned fundraising at $95 billion. CNBC reported that Meta said on 26 October it would first seek $35 billion through underwritten public equity offerings, followed by $60 billion through an at-the-market programme.
S&P expects growth in Meta’s capital expenditure to begin flattening in 2028, but said it was less certain the company would restrain spending as it had previously anticipated. The agency said elevated investment could keep free operating cash flow negative beyond 2028. It expects Meta to cover its 2028 cash shortfall entirely with debt.
