S&P Lowers Meta’s Credit Outlook Amid Soaring AI Spending

Meta's credit outlook has been downgraded, indicating a potential future downgrade if spending and revenue targets are not met.

S&P Global Ratings revised Meta Platforms' outlook from stable to negative on October 30, 2026, while maintaining its AA- credit rating. The agency cited uncertainty regarding Meta's elevated capital spending and projected negative free cash flow, stating that Meta's ability to monetize its AI investments is more limited than its peers. S&P forecasts Meta's leverage will reach 1.3x by 2028, exceeding the 1.0x downgrade threshold, with this shortfall expected to be funded entirely by debt. Meta has been actively raising capital, including a $37.5 billion stock and convertible preferred offering and a planned $60 billion share program starting in January 2027, to support its aggressive AI infrastructure buildout. Despite strong revenue growth in its core advertising business, the escalating costs of AI investments are outpacing its monetization timeline.

Meta's unique AI monetization strategy, which relies on its own applications rather than cloud-based rentals, presents a significant challenge compared to competitors. This reliance on advertising, engagement, and still-developing products means a longer and more uncertain path to generating substantial revenue from its massive AI investments. The company's substantial equity raises, while protecting its credit rating, dilute existing shareholders and are unusual for a company with its credit standing.

The market will closely watch Meta's upcoming earnings reports for more specific capital expenditure guidance, particularly for 2027. If the projected spending increases significantly without clear AI revenue targets, or if the stock price remains below key levels, S&P's concerns are likely to be amplified. This situation could put pressure on Meta's stock performance and its ability to secure future financing at favorable terms.