S&P Global Ratings has lowered its outlook for Meta Platforms from ‘stable’ to ‘negative’. The move reflects concerns about the company’s substantial investments in artificial intelligence and their impact on free operating cash flow (FOCF), according to Reuters.
Major technology companies have long been investing in e-commerce and cloud infrastructure. However, the current AI boom has driven capital expenditure to levels that have investors concerned about how quickly those investments will generate returns.
Financial forecasts for Meta point to a sharp rise in spending, with annual capital expenditure estimated at between $135 billion and $145 billion (€120–129 billion). This follows a free cash flow deficit of $2.12 billion (€1.89 billion) in the third quarter. To finance these expansions, Meta plans to raise $97.5 billion (€87 billion) through share sales.
S&P has warned that Meta may find it harder than its competitors to profit from AI, pointing to a lack of clarity over when revenue from these technologies will offset rising costs.
The rating agency forecasts substantial cash flow shortfalls for Meta. These are expected to reach $39 billion (€34.8 billion) this year and $71 billion (€63.3 billion) in 2027. S&P suggests that these shortfalls could persist beyond 2028, leaving Meta entirely reliant on borrowed money to cover them.
Furthermore, the agency expects Meta’s leverage ratio could exceed 1.0x by 2027, a critical threshold for retaining its ‘AA-‘ credit rating.
In response, a Meta spokesperson disputed S&P’s findings, saying that the company sees substantial AI-driven business prospects and believes its creditworthiness remains robust.
S&P notes that, although Meta’s leverage ratio was low in 2025 – largely because it leased data centres rather than taking out loans – persistently high spending could further undermine its financial profile. At the end of September, Meta’s long-term debt stood at $80.92 billion (€72.19 billion).
This scrutiny extends beyond Meta; S&P has also revised its outlook for Broadcom from “positive” to “stable”, citing risks associated with a small group of dominant AI customers. Oracle also recently saw its rating fall to ‘BBB-‘, just above speculative grade, as a result of high debt levels.
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