S&P Changes Meta Credit Outlook to Negative Amid AI Spending Concerns
S&P Global Ratings changed Meta's credit outlook from stable to negative while keeping its AA- rating, citing uncertainty over billions in artificial intelligence investments.
KEY POINTS
- S&P changed Meta's credit outlook from stable to negative
- Meta's AA- credit rating remains unchanged
- Meta reported $2.12 billion in negative free cash flow in Q3
- Meta plans $135 billion to $180 billion in capital investments this year
- Meta disputes S&P's assessment of its AI monetization ability
S&P Global Ratings changed Meta's credit outlook from stable to negative on October 30 while keeping its AA- credit rating unchanged.
The agency cited concerns about Meta's heavy spending on artificial intelligence infrastructure and its ability to generate enough revenue to cover rising costs.
“Meta disagrees with S&P's interpretation of its ability to monetize AI and sees significant opportunities in AI products and businesses.”
Meta reported negative free cash flow of $2.12 billion in the third quarter, the first time the company recorded a negative result in that measure.
The company plans capital investments between $135 billion and $180 billion this year, much of it directed toward AI and data center construction.
Meta disagreed with S&P's assessment, saying in a statement that it sees significant opportunities in AI products and businesses.
A negative outlook means a lower rating is possible if Meta's financial position develops unfavourably, though the change is not automatic.
Investment-grade ratings extend down to BBB-, while ratings below that level are considered speculative grade or junk.
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