S&P Global Ratings moved its outlook on Meta Platforms to negative from stable on Friday, citing uncertainty over the company's capital spending and its ability to turn artificial intelligence investments into cash.
The agency forecast a free operating cash flow deficit of $39 billion for 2026 and $71 billion for 2027, according to Channel NewsAsia. It said heavy spending could keep cash flow negative past 2028 and expects Meta to cover its 2028 shortfall entirely with debt.
S&P kept the AA- issuer credit rating in place. It said Meta's debt measured against earnings could rise above 1.0x as early as 2027, the level it uses as a threshold for that rating. That ratio stood at about 0.1x in 2025, a figure the agency linked to Meta leasing data center capacity instead of issuing debt.
“Given the lack of clarity around the company's future capex and its very ambitious multi-year AI investment plans, we are less certain that it will curtail its spending as previously anticipated,” S&P said, according to Channel NewsAsia.
Meta said last week it expects annual capital expenditure of $135 billion to $145 billion after a $2.12 billion free cash flow deficit in the third quarter. The company began a $35 billion share sale this week to help fund the buildout, The Next Web reported, while Channel NewsAsia said Meta plans to sell $97.5 billion in stock.
Unlike Amazon, Microsoft and Alphabet, Meta does not yet rent out computing power through a cloud business, The Next Web reported, which leaves it fewer ways to earn back the money. Chief executive Mark Zuckerberg has said the company bet about $200 billion on AI without knowing whether the spending would pay off.
Meta pushed back on the rating action. “We respectfully disagree with S&P's assertion about Meta's AI monetization capabilities,” spokesperson Kamran Mumtaz said. The company sees “significant product and business opportunities ahead of us, supporting our very strong credit profile,” he added.
Naveen Sarma, who leads S&P's US media and telecom coverage, said further spending growth would keep eroding credit quality. “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,” he said, according to Channel NewsAsia.
Meta is not the only company under cash strain from the buildout. Amazon reported a $42.4 billion free cash outflow tied to its own AI spending, as GlobeTV reported this week.
The agency has also downgraded Oracle over its data center bills, according to The Next Web. Tech stocks have sold off as investors weigh the cost of the buildout. The Nasdaq 100 lost 3.5% over the week and briefly traded in correction territory, The Next Web reported. Commitments from the largest technology companies to AI infrastructure now exceed $3 trillion.