S&P Global Ratings revised Meta Platforms' credit outlook from stable to negative, pointing to the company's $135–$145 billion capital expenditure forecast and its first-ever quarter of negative free cash flow of $2.12 billion.
S&P Global Ratings revised its outlook on Meta Platforms to negative on Friday, citing concerns over the company's surging capital expenditures and its first-ever quarter of negative free cash flow, underscoring growing scrutiny of Big Tech's AI infrastructure bets.
The credit agency kept Meta's rating at AA— but shifted the outlook from stable to negative, reflecting what it described as "uncertainty" around elevated capex and the company's path to monetizing its AI investments.
S&P's highest rating is AAA. Any rating below BBB falls into junk bond territory, making the AA— designation still investment-grade, though the outlook shift signals that the agency is watching Meta's financial trajectory more closely.
The agency questioned "Meta's ability to monetize its AI investments" relative to its peers, which are also spending heavily on data center buildouts and going cash flow negative in the process.
Meta reported negative free cash flow of $2.12 billion in its third-quarter earnings last week — the company's first time in the red on that measure. The report also revealed that Meta expects full-year capital expenditures to land between $135 billion and $145 billion.
Although Meta recently launched its Muse AI agent app and related foundation models, S&P said "it is unclear when these revenue streams will generate material contributions that exceed their rising costs over the next few years."
A Meta spokesperson pushed back on the revision. "We respectfully disagree with S&P's assertion about Meta's AI monetization capabilities," the spokesperson said in a statement. "We see significant product and business opportunities ahead of us, supporting our very strong credit profile."
Despite a revenue beat in the third-quarter report, investors sent Meta shares down 7% following the earnings release. The stock finished October down 15%, its worst month in four years.
To help fund its AI ambitions, Meta said Monday that it plans to raise $95 billion — first through $35 billion in underwritten public equity offerings, followed by an additional $60 billion through an at-the-market program.
S&P said it expects Meta's capex growth to begin "flattening out beginning in 2028," but added that the agency is "less certain that it will curtail its spending as previously anticipated."
The revision comes as Meta is far from alone in its AI-driven spending surge. Rivals across the cloud and social media landscape are similarly pouring capital into data centers and foundation models, betting that infrastructure investment today will translate into durable competitive advantages — and revenue — in the years ahead.
For now, the S&P action puts additional pressure on Meta's leadership to demonstrate a clearer line between AI expenditure and financial returns, a question that analysts and investors are likely to press with increasing urgency heading into 2027.
Marc Sabatini is a staff writer at TechEchelon covering enterprise software, cybersecurity, and the regulatory beats that shape both. He focuses on the deal flow and policy decisions that move markets.
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