S&P Global Ratings revised Meta Platforms’ credit outlook to negative from stable, while affirming its AA- rating. The agency cited uncertainty over the duration of Meta’s heavy capital spending on AI and when those investments will generate revenue. S&P forecasts that Meta could have a free operating cash flow deficit of $71 billion in 2027.
The outlook revision follows Meta’s first quarterly free cash flow deficit in more than a decade. Meta also announced plans to sell nearly $100 billion in shares to fund its AI infrastructure. Its stock had already fallen 15% in October ahead of the announcement.
A Meta spokesperson said the company “respectfully disagree[s] with S&P’s assertion about Meta’s AI monetization capabilities,” adding that it sees significant opportunities ahead.
The initial market reaction appeared muted, with Meta’s shares mostly flat in after-hours trading. S&P’s move could precede a credit rating downgrade within the next two years if Meta’s leverage rises and free cash flow remains negative beyond 2028.