S&P projects Meta will face multi-year free operating cash flow deficits reaching tens of billions of dollars through at least 2027 as infrastructure costs accelerate. The agency flagged that elevated spending, large-scale stock sales, and aggressive data-center leasing could breach credit leverage thresholds within three years. Meta reported long-term debt of $80.92 billion as of September 30 while publicly disagreeing with concerns over its AI revenue potential.
Key points
Surging artificial intelligence spending threatens to push Meta's leverage above the 1.0x…: Surging artificial intelligence spending threatens to push Meta's leverage above the 1.0x threshold required to maintain its current credit rating.
Credit analysts project Meta may need to rely entirely on debt financing to cover its ant…: Credit analysts project Meta may need to rely entirely on debt financing to cover its anticipated cash shortfall by 2028.
Meta maintains that strong business opportunities ahead will support its credit profile d…: Meta maintains that strong business opportunities ahead will support its credit profile despite rating agency skepticism regarding its monetization timeline.
Sources checked by our analysis pipeline: 1
Oct 30 : S&P Global Ratings on Friday revised its outlook on Meta Platforms to "negative" from "stable", citing significant uncertainty around the social media giant's capital spending and free operating cash flow.
Big Tech has historically spent heavily on cloud computing, online advertising and e-commerce, but the AI boom has pushed capital expenditure to dizzying levels, stoking investor concerns about whether the sector can generate returns quickly enough.
Last week, Meta forecast annual capital expenditure between $135 billion-$145 billion after reporting a free cash flow deficit of $2.12 billion in the third quarter. Meta is also planning to tap public markets and sell $97.5 billion in stock to fund the AI buildout.
Meta's ability to monetize its AI investments is more limited than that of its peers, S&P said, adding it was unclear when its revenue streams would generate material contributions exceeding their rising costs over the next few years.
S&P now forecasts Meta will generate FOCF deficits of $39 billion in 2026 and $71 billion in 2027.
The agency said elevated spending could keep FOCF negative beyond 2028…
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