S&P Global Ratings moved the outlook on Meta Platforms’ AA- credit rating to negative on Friday, signaling that a downgrade could follow within the next two years.
Leverage and AI spending drive the outlook shift
The rating agency highlighted a rise in leverage, debt relative to earnings, as a central concern. It added that Meta’s AI-related capital expenditures are still far from generating revenue that outweighs the mounting costs.
“Meta’s ability to monetise its AI investments is more limited than that of its peers,” the agency said in its statement.
S&P projects Meta’s capex to hit US$140 billion this year and climb above US$225 billion by 2027. The firm’s leverage could exceed one-times as early as next year, up from roughly 0.1-times in the prior period.
Earlier this month, Meta disclosed more than US$800 billion in future spending commitments, nearly half of which are tied to leases for data centres and energy infrastructure that have not yet commenced.
Meta pushes back on the rating assessment
Company spokesperson Kamran Mumtaz said in a statement, “We see significant product and business opportunities ahead of us, supporting our very strong credit profile.” Meta’s current AA- credit rating is the fourth-highest investment-grade score.
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Chief financial officer Susan Li told analysts, “We expect to continue investing aggressively to support both our core business and emerging AI initiatives.”
Recent months have seen the launch of the Muse family of models and a personal AI agent. Meta’s executives have outlined potential earnings from subscriptions, transaction fees, and the integration of advertising into these new services.
Meta is also exploring a cloud offering that could sell access to its AI models or raw computing capacity, leveraging the infrastructure built for its social-media platforms.
The Nasdaq-100 slipped 3.5 percent on Friday, briefly entering technical correction territory as tech earnings fell short of expectations.
Despite the negative outlook, a one-notch downgrade would still leave the company within high-grade territory.
S&P clarified that it is not actively considering an immediate downgrade, but the outlook change reflects uncertainty about the duration of raised capital spending and whether free operating cash flow will remain negative.
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