Meta Credit Rating Outlook Cut to Negative by S&P Over AI Capex
S&P Global Ratings has cut its Meta credit rating outlook to negative from stable, warning on October 30, 2026 that the company’s AI data center spending could push its leverage above the agency’s downgrade threshold as early as 2027. Meta keeps its “AA-” issuer credit rating for now, but S&P says a downgrade is possible if capex stays this high and AI revenue is slow to arrive.
Why S&P Changed the Meta Credit Rating Outlook
In its research update, S&P said it now expects Meta’s capital expenditure to reach about $140 billion in 2026 and to accelerate to more than $225 billion in 2027 and $252 billion in 2028. Its previous forecasts for those two years were $163 billion and $178 billion.
The agency expects Meta’s free operating cash flow to stay negative for longer than it previously thought, with deficits of about $22 billion in 2026, $71 billion in 2027 and $39 billion in 2028. Until now, S&P had expected Meta to return to positive free cash flow in 2028.
The bigger concern is leverage. S&P says Meta’s adjusted leverage, about 0.1x in 2025, could rise to 1.1x in 2027 and 1.3x in 2028. That jump comes mostly from long-term leases on data center capacity, including the mega projects code-named Beignet and Sopaipilla, rather than from new bond issuance. A level above 1.0x is the trigger for a downgrade from AA-.
Meta Pushes Back on AI Monetization Doubts
S&P also questioned Meta’s ability to turn its AI spending into revenue as quickly as rivals. According to CNBC, the agency said it is unclear when products such as the Muse AI agent app and Meta’s Muse Wonder models will bring in more money than they cost.
A Meta spokesperson told CNBC: “We respectfully disagree with S&P’s assertion about Meta’s AI monetization capabilities. We see significant product and business opportunities ahead of us, supporting our very strong credit profile.”
A Rough Month for Meta Stock
The move follows a tough few weeks. In its third quarter report, Meta guided full-year 2026 capex to $135 billion to $145 billion and posted negative free cash flow of $2.12 billion, its first quarter in the red. Shares fell 7% after the report and ended October down 15%, their worst month in four years. Meta also announced plans to raise $95 billion in equity, starting with public offerings and followed by a $60 billion at-the-market program.
Meta is not alone. AI spending is straining balance sheets across the industry: OpenAI has scaled back its latest funding round, Intel just had its worst trading day since the 1970s, and the data center buildout is a big reason RAM prices keep climbing.
What It Means
A negative outlook is a warning, not a downgrade. S&P says it could return the outlook to stable if Meta keeps leverage under 1.0x and shows it can generate positive free cash flow in 2028. For investors, the message is that even one of the most profitable companies in tech now has limits on how far it can stretch its balance sheet for AI.
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