S&P Turns Meta Platforms (META) Outlook Negative on $225 Billion Capex Path

S&P Flags Meta's AI Spending Gap

S&P Global Ratings lowered its outlook on Meta Platforms (META) to negative from stable on Friday, October 30, leaving the AA- credit rating itself unchanged. The grade still sits comfortably in high-grade territory, well above the BB+ line where junk status begins, but the shift works as a formal warning that the balance-sheet path now carries visible downside risk.

The agency's objection centers on the company's artificial-intelligence bill. In its statement, S&P flagged uncertainty over how long capital expenditures will stay elevated and over a first run of negative free operating cash flow, and it argued that Meta has fewer routes to monetization than its big-tech rivals. The distinction matters: cloud providers sell computing capacity and AI services straight to enterprise customers, while Meta has historically sold advertising on Facebook, Instagram and WhatsApp. The agency wrote that it remains unclear when the infrastructure build-out will start generating enough revenue to cover rising expenses.

Meta pushed back the same day. “We respectfully disagree with S&P's assertion about Meta's AI monetisation capabilities. We see significant product and business opportunities ahead of us, supporting our very strong credit profile,” spokesperson Kamran Mumtaz said in the company's response.

The quarterly results the agency weighed were mixed. Adjusted earnings of $7.40 per share rose 2.1% year over year and landed 13.5% above consensus, while revenue of $64.6 billion grew 26% and beat estimates by 1.88%, carried by advertising volume up 10% and pricing up 14%. Operating profitability took a different turn: infrastructure spending and legal costs pushed free cash flow negative for the first time, a shortfall of $2.12 billion. Management guided full-year capital expenditures to $135 billion to $145 billion, and S&P's own projections put spending at roughly $140 billion this year, on track to exceed $225 billion by 2027. The agency added that this surge could lift leverage above 1.0x as early as next year, a jump from about 0.1x last year.

A $95 Billion Funding Plan

The outlook change sharpens a question S&P had already raised in its own August projection that AI infrastructure investment will exceed $1.3 trillion by 2027. In the new note, the agency said Meta's recent releases, including its Muse AI agent app and related foundation models, give no clear answer on when these revenue sources will contribute meaningfully beyond rising costs over the coming years. S&P had expected Meta's capital-expenditure growth to slow from 2028; it now says it is less certain the company will trim spending on that schedule.

The action landed as the tech earnings week closed badly. Intel's guidance miss sent its shares down 28.6% at the close, Alphabet shed roughly 14% across two sessions, and the strain on companies borrowing to finance AI expansion is now showing up in credit markets.

Meta's plan is to fund the build-out largely through the equity market. The company has disclosed an intention to raise up to $95 billion through stock sales for data center capacity, opening with a first wave of deals worth $35 billion, mostly through common stock issuances. Corporate filings show preliminary interest from three firms, including Nvidia, Advanced Micro Devices and Broadcom, in buying up to $5 billion in shares. The company's official offering notice also covers $12.5 billion of Series A depositary shares, each representing a twentieth of a mandatory convertible preferred share, set to trade separately on Nasdaq under a special ticker until they convert into common stock by August 15, 2029. An at-the-market program of about $60 billion is scheduled to start within the first few months of next year. Liquidity buffers stay deep: $82.45 billion in cash and marketable securities as of September 30, 2026, $32.79 billion in quarterly operating cash flow, against long-term debt near $80.92 billion.

Meta Stock Levels After the Rating Cut

Meta's stock last changed hands at $615.07, down 0.71% over the past 24 hours and inside a $611.03 to $627.58 range, COINOTAG data shows. The reading arrives with the daily trend still classified as a downtrend, the 14-day RSI at 29.8 and a bearish MACD signal, so the rating action is landing on a chart that had already been giving ground. COINOTAG's composite scoring rates the $622.36 resistance at 98 out of 100, the heaviest ceiling directly above the market, while the strongest support sits at $578.16, scored 86 out of 100. A daily close above $622.36 would ease the pressure; losing $578.16 would extend the slide. Perpetual open interest stands near $31.3 million.