S&P Global Ratings has revised Meta Platforms’ credit outlook to negative, adding financial pressure to the company’s expanding artificial intelligence program while leaving its AA- rating unchanged. The ratings agency made the change on October 30, citing higher capital expenditures, weaker cash generation and uncertainty over the timing of returns from Meta’s AI investments.
The decision follows a sharp increase in the resources Meta is directing toward data centers and other artificial-intelligence infrastructure. Meta’s third-quarter results showed free cash flow turning negative for the first time, at negative $2.12 billion, while capital expenditures reached $34.9 billion and exceeded operating cash flow.
Capital spending is set to rise further
Meta’s own guidance points to a much larger spending commitment ahead. The company expects full-year capital expenditures to total between $135 billion and $145 billion. That forecast has made the relationship between investment, cash generation and future AI revenue a central issue in S&P’s assessment.
Meta reported a 26% increase in revenue in its third-quarter financial report and exceeded market estimates, according to the report. Its shares nevertheless fell 7% after the company announced those results on October 22. The share move followed the earnings announcement and is separate from S&P’s decision to revise the credit outlook.
“It is unclear when these revenue streams will generate material contributions that exceed their rising costs over the next few years,” S&P said.
The agency’s concern centers on whether Meta can turn its expanding AI portfolio into revenue at a pace that justifies the spending. S&P specifically pointed to the company’s recently introduced Muse AI agent application and related foundation models, while questioning when those products will make a substantial financial contribution.
Ratings agency sees a long investment cycle
S&P expects the growth in Meta’s capital expenditures to begin stabilizing in 2028. Even so, the agency expressed reservations about whether management will reduce investment as previously anticipated and whether the company can produce financial returns from AI as quickly as other major technology companies are investing.
- Credit rating: Meta’s AA- rating was maintained.
- Outlook: S&P changed it from stable to negative on October 30.
- Third-quarter free cash flow: Negative $2.12 billion.
- Full-year capital expenditures: Expected at $135 billion to $145 billion.
The revised outlook does not constitute a ratings downgrade, but it signals that S&P sees greater risk around Meta’s financial profile if investment continues to outpace cash generation. The agency’s assessment also highlights the difficulty of evaluating AI spending before new products and models produce material revenue. For Meta, the immediate issue is not whether it is investing in AI, but how long the company can sustain that investment while demonstrating that the resulting businesses can cover their rising costs.
