S&P Global Ratings has cut its outlook on Meta Platforms to negative from stable, citing significant uncertainty around the company’s capital spending and free operating cash flow. The agency affirmed Meta’s AA- issuer credit rating, but warned it was now less certain the company would curtail its spending as previously anticipated.
The decision lands as the artificial intelligence buildout pushes Big Tech capital expenditure to extraordinary levels, stoking investor concern about whether the sector can generate returns quickly enough. Meta last week forecast annual capital expenditure of between $135 billion and $145 billion, after reporting a free cash flow deficit of $2.12 billion in the third quarter. It also plans to tap public markets, including a $97.5 billion stock sale, to fund the buildout.
S&P said Meta’s ability to monetise its AI investments is more limited than that of its peers, and that it was unclear when its revenue streams would generate material contributions exceeding their rising costs over the next few years. The agency now forecasts free operating cash flow deficits of $39 billion in 2026 and $71 billion in 2027, and said elevated spending could keep free operating cash flow negative beyond 2028, with the 2028 cash shortfall funded entirely with debt.
Leverage is the other pressure point. S&P said Meta’s leverage could rise to above 1.0 times as early as 2027, which is the agency’s threshold for the AA- rating. Leverage has already increased from 0.1 times in 2025, primarily because of the company’s strategy of leasing data-centre capacity rather than issuing debt. Meta reported long-term debt of $80.92 billion as of 30 September.
Meta pushed back against the assessment. A spokesperson told Reuters: “We respectfully disagree with S&P’s assertion about Meta’s AI monetization capabilities,” adding that the company sees “significant product and business opportunities ahead of us, supporting our very strong credit profile.” Naveen Sarma, S&P’s US media and telecom sector lead, warned that “if capex remains elevated and continues to grow at a faster pace than we expect, credit profiles will continue to weaken and cash flows will be negative.”
The move is a warning rather than a downgrade: the rating itself is unchanged, but a negative outlook signals that a downgrade could follow if spending stays elevated. S&P also lowered its outlook on chipmaker Broadcom to stable from positive on Thursday, underlining how the debate over AI spending is now reaching credit ratings across the sector.
Sources: Reuters, “S&P Global revises Meta’s outlook to ‘negative’ on AI spending, cash flow worries” (30 October 2026), via https://wixx.com/2026/10/30/sp-global-revises-outlook-on-meta-to-negative-on-cashflow-concerns/
