S&P’s negative outlook on Meta underscores the risks of the AI spending boom
Source: Fortune ·
Meta's massive capital outlays are raising questions about when AI will pay off.
From the source
Good morning. After last week’s tech earnings, Wall Street is increasingly questioning the sustainability of the AI spending boom. Late Friday, S&P Global revised its outlook on Meta to “negative” from “stable,” citing negative cash flow and uncertainty around its capital expenditure plans, Fortune’s Jason Ma reports . The agency affirmed Meta’s AA- credit rating but warned that the company’s leverage could exceed 1.0x as early as 2027. That’s the threshold for Meta’s current rating. Leverage is up from about 0.1x in 2025, largely because of Meta’s strategy of leasing data-center capacity, rather than relying solely on traditional debt financing. S&P projects Meta’s capex will reach $140 billion this year, exceed $225 billion in 2027 and hit $252 billion in 2028 before flattening out. It expects free operating cash flow to remain negative: -$22 billion this year, -$71 billion in 2027 and -$39 billion in 2028. Other hyperscalers are also running cash deficits. According to S&P, what…
BestAIBroker analysis
- Finance-aware sentiment: negative (-0.50 on a -1 to +1 scale).
- Event classification: GUIDANCE.
- Market importance score: 49/100, weighting entity relevance, source credibility, multi-outlet coverage and recency.
- Symbols referenced: META.