S&P Global Ratings has revised its outlook on Meta to negative from stable, citing mounting artificial intelligence costs and cash-flow concerns, while affirming the company's AA- credit rating.

The rating keeps the technology giant firmly in the upper echelon of companies, comfortably above the BB+ "junk" threshold. The negative outlook, however, serves as an official warning of potential downside risk. In rating-agency practice, an outlook revision leaves the rating itself untouched while signaling the direction of risk: the AA- grade places Meta in the high-grade tier, reflecting what S&P defines as a very strong capacity to meet financial commitments, and a negative outlook means a downgrade could follow if the flagged pressures persist.

In its statement, S&P Global Ratings directly challenged Meta's AI playbook, arguing that the social media giant has fewer paths to monetization than its big technology rivals. The agency emphasized that it remains unclear when the company's infrastructure investments will begin generating enough revenue to cover rising expenses.

According to S&P, the revised assessment points to uncertainty over the duration of high capital expenditures and continued negative free operating cash flow.

Meta disputes the assessment

Meta has pushed back against the agency's judgment. "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," company spokesperson Kamran Mumtaz stated.

The disagreement comes despite a strong third-quarter earnings report. Meta posted adjusted earnings of $7.40 per share, a 2.1% improvement from the same period last year and 13.5% above the consensus forecast. Quarterly revenue reached $64.6 billion, marking a 26% annual jump and beating estimates by 1.88%.

Most of that revenue performance was anchored by a healthy advertising market, with advertising volume up 10% and pricing power up 14%.

Meta's AI investments are already improving its advertising business through better recommendations, greater user engagement and stronger ad targeting. S&P's concern is whether those improvements will generate enough additional revenue to offset the enormous cost of building and running AI infrastructure.

Unlike cloud computing companies, which can sell computing capacity and AI services directly to enterprise customers, Meta has traditionally sold advertising on Facebook, Instagram and WhatsApp. Peers such as Microsoft, Amazon and Alphabet all operate cloud arms that bill corporate customers for computing power and AI services — a revenue channel Meta does not have. Its AI tools could generate new revenue streams, but the company has not yet demonstrated that those opportunities will return at the scale necessary to cover infrastructure costs. Meta says its investments will create big business opportunities and improve existing products, but the timing and magnitude of those returns remain unclear.

Cash flow under pressure

Meta's operating profitability suffered a dual punch from accelerating capital infrastructure expenses and mounting legal costs. The firm posted negative free cash flow for the first time, recording a $2.12 billion shortfall. Free cash flow — what remains after operating costs and capital spending — is the pool companies typically draw on for buybacks, dividends and debt service, which is why S&P flagged continued negative free operating cash flow in its revised assessment.

The company projected full-year capital expenditures of $135 billion to $145 billion. Under S&P's projections, Meta's capital expenditures are on track to reach $140 billion this year, then climb above $225 billion by 2027. The rating agency noted in its statement that this massive spending surge could push the company's leverage ratio above 1.0x as early as next year — a stark jump from the roughly 0.1x recorded last year.

Despite the growing financial pressure, Meta still has considerable resources to support its expansion. As of September 30, 2026, the company held $82.45 billion in cash equivalents and marketable securities and generated $32.79 billion in operating cash flow during the third quarter, meaning its core business is still producing significant liquidity.

Long-term debt stood at about $80.92 billion at the end of the quarter. Rising borrowing requirements from aggressive infrastructure investments and weaker free cash flow, however, could erode the financial flexibility that has underpinned Meta's strong credit rating.

Meta plans to raise up to $95 billion through stock sales

Meta recently revealed plans to raise up to $95 billion through stock sales to help build its data center capacity. The program will start with a series of deals worth $35 billion, the majority of which Meta expects to generate through common stock issuances. Based on corporate filings, three firms — including Nvidia, Advanced Micro Devices and Broadcom — have already shown preliminary interest in buying up to $5 billion in shares.

Additionally, the fundraising program will include $12.5 billion of Series A depositary shares, which consist of a fraction (1/20th) of Meta's Series A mandatory convertible preferred stock. These complex securities are to be traded separately on Nasdaq under a special ticker symbol until August 15, 2029, when they will automatically convert into common Meta stock. Wall Street underwriters can also expand the deal by purchasing an additional 3.375 billion common shares and 37.5 million depositary units.

Moreover, the technology company will initiate an at-the-market (ATM) program within the first few months of next year to raise around $60 billion in capital through share sales. With the outlook on negative, the pace of those share sales and the trajectory of capital spending are the near-term markers that could shape how S&P's assessment evolves from here.