S&P Global Ratings moved Meta Platforms' credit outlook from stable to negative on Friday, citing rapid and sizable investments tied to artificial intelligence. The ratings agency said it is concerned that large capital expenditures could produce sustained cash outflows while it remains uncertain when those investments will generate returns.
S&P projections: capex and free cash flow
S&P projects Meta's capital expenditures (capex) will rise sharply over the coming years: it estimates capex could reach $140 billion this year, exceed $225 billion in 2027, and climb to $252 billion in 2028. The agency says this substantial increase in spending will put significant pressure on Meta's ability to generate cash.
Accordingly, S&P forecasts the company's operating free cash flow will be deeply negative: about a $22 billion deficit this year, a $71 billion shortfall in 2027, and a $39 billion negative free cash flow in 2028.
Monetization challenges and competitive position
The report warns that Meta may have more limited near-term options to monetize its AI investments compared with some competitors. While several rivals are already generating revenue by leasing data-center capacity, Meta expects returns primarily from improvements to its advertising systems and from new AI-based services. S&P notes it is unclear when — or if — these developments will translate into material incremental revenue.
Credit risks
S&P cautions that Meta's credit rating could come under further pressure if the company's adjusted leverage ratio remains persistently above 1.0 or if operating free cash flow stays negative beyond 2028. Those conditions, combined with large capex, could lead to additional rating actions.
Why this matters
The move highlights that ratings agencies now weigh not only revenue trends and market share but also the sustainability and financing implications of large AI and data-center investments. For Meta, the agency's analysis points to potential near- and medium-term liquidity and cash-flow risks that could affect funding costs and strategic choices.
The cover image is illustrative.
This article does not constitute investment advice.
