S&P cuts Meta’s credit outlook to negative over AI spending risks

Meta sees significant business opportunities in AI. S&P Global Ratings sees spending whose payoff remains uncertain. On October 30, the agency changed the outlook on Meta’s AA- credit rating from stable to negative, The Next Web reported, citing Bloomberg. Meta disputed the assessment, setting up a disagreement over how its AI investments will earn money.

The action changed the outlook, not the AA- rating itself. S&P’s warning centers on whether Meta can earn enough from AI to cover its investment costs—and how much debt it will carry relative to earnings while it waits.

A revenue route Meta lacks

Unlike Amazon, Microsoft and Google, Meta does not have a cloud business renting computing power to customers. That gives the comparison a specific business-model distinction: those rivals have a route to selling computing capacity that Meta does not currently share.

Meta’s ability to monetize its AI investments is more limited than that of its peers,

S&P Global Ratings, quoted by The Next Web

S&P said it remains unclear when Meta’s AI spending will bring in more revenue than it costs. Its concern is therefore about both the available ways to earn money and the timing of those returns, rather than a claim that AI offers Meta no business opportunities.

Debt forecast approaches the rating limit

The agency expects Meta’s leverage—debt measured against earnings—to rise above 1.0 times as soon as 2027, compared with about 0.1 times in 2025. That would breach the limit for its current rating. The forecast is a warning about Meta’s future financial position, not a ratio it has already reached.

The current cash demands are already substantial. Meta posted a third-quarter free cash outflow of $2.12 billion. It also has $825 billion in commitments lined up and began a $35 billion share sale earlier that week to help finance the AI buildout.

Meta’s response challenged S&P’s view of its ability to turn AI into revenue. Spokesperson Kamran Mumtaz said the company respectfully disagrees with that assessment. He pointed to significant product and business opportunities ahead, which Meta believes support its very strong credit profile.