Meta's $145 Billion AI Spending Plan Raises Credit Concerns as S&P Global Turns Outlook Negative: ‘Less Certain That It Will Curtail Its Spending’
Mohd Haider 10 hours ago
MarketsTechNewsAnalyst RatingsDowngradesGeneralEquities
S&P Global cuts Meta’s credit outlook to negative as rising AI spending and cash flow pressures raise concerns over leverage.
S&P Global Ratings (NYSE:SPGI) revised its outlook on Meta Platforms Inc. (NASDAQ:META) to "negative" from "stable" on Friday, citing uncertainty over the company’s capital spending and free operating cash flow (FOCF).
Spending Plans Raise Red Flags
Last week, Meta forecast annual capital expenditure of $135 billion to $145 billion. It also posted a third-quarter free cash flow deficit of $2.12 billion. The company plans to sell $97.5 billion in stock to fund its AI investments.
S&P now expects Meta’s FOCF deficits of $22 billion in 2026 and $71 billion in 2027, and lessening losses in 2028, about $39 billion.
S&P said, "we are less certain that it will curtail its spending as previously anticipated."
Leverage Could Test ‘AA-’ Rating Threshold
S&P said Meta’s leverage could top 1.0x as early as 2027. That is the downgrade threshold for its "AA-" issuer credit rating. Leverage rose from 0.1x in 2025, mainly because Meta leases data-center capacity rather than issuing debt, S&P said.
Long-term debt stood at $80.92 billion as of Sept. 30.
In mid-October, Meta CEO Mark Zuckerberg said its profitable core business and strong credit let it underwrite AI costs. He said other tech companies would pay for Meta’s computing capacity if its AI products fail, but the technology succeeds broadly.
Some market participants also disagree with S&P’s caution. Aptus Capital Advisors portfolio manager David Wagner said worries over Meta’s debt and AI spending look overstated, because hyperscalers carry much stronger debt coverage than the broader market.
AI Spending Draws Wider Credit Scrutiny
Earlier this year, S&P cut Oracle Corp. (NYSE:ORCL) to ‘BBB-/A-3’ from ‘BBB/A-2’
Meta has a market capitalization of $1.572 trillion, a 52-week high of $779.82 and a 52-week low of $520.26.
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