Meta’s headquarters entrance in Menlo Park, California, in March 2022. Photo, cropped: LPS.1 / Wikimedia Commons, CC0.
S&P Global Ratings revised Meta Platforms’ credit outlook to negative from stable on Friday, warning that heavy spending on artificial intelligence infrastructure could keep free operating cash flow negative for longer than it previously expected.
The ratings agency affirmed Meta’s AA- issuer credit rating. The action changed the outlook, not the rating itself.
In its October 30 research update, S&P said Meta’s adjusted leverage could exceed 1.0 times as early as 2027, a threshold it uses when considering a downgrade at the current rating. It said the rise from about 0.1 times in 2025 would primarily reflect commitments to lease data-center capacity rather than new debt issuance alone.
S&P forecasts capital spending of about $140 billion this year, more than $225 billion in 2027 and $252 billion in 2028. Those are the agency’s projections, not company guidance for 2027 and 2028. S&P noted that Meta had not yet disclosed its spending plans for 2027.
The agency now projects free operating cash-flow deficits of $22 billion in 2026, $71 billion in 2027 and $39 billion in 2028. It previously expected the company to return to positive free operating cash flow in 2028.
S&P said Meta’s AI investments could improve advertising and create new revenue streams, but that the timing and scale of those returns remain uncertain. It contrasted Meta’s business with peers already selling data-center computing capacity to outside customers.
The research update also recognized the strength of Meta’s core advertising business and described its capital-raising plans as credit positive. S&P said a future downgrade could follow if it expected leverage to remain above 1.0 times and free operating cash flow to stay negative beyond 2028.
The negative outlook signals a risk of a future rating change. It does not mean S&P has already downgraded Meta or that its forecasts are certain to occur.
JBizNews Desk | New York
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