S&P Global Ratings revised its outlook on Meta Platforms to negative from stable on Friday, October 30, while leaving the company’s AA- credit rating where it was, CNBC reported. The agency cited Meta’s elevated capital spending, its negative free cash flow and doubts about how quickly its artificial intelligence products will bring in revenue. Meta told CNBC that it disagrees with part of the assessment.

The change is a warning about direction, not a downgrade. According to CNBC, the rating itself is unchanged at AA-; the outlook is the part that moved. Lens could not open S&P’s own report, so the agency’s reasoning below comes from CNBC’s account of it, and the surrounding financial detail comes from CNBC and from Reuters reporting carried by other outlets.

What S&P said

CNBC’s report, written by Jonathan Vanian, says S&P tied the outlook change to uncertainty over Meta’s elevated capital expenditures and its negative free cash flow. The agency also questioned whether Meta can turn its AI investments into revenue as effectively as its peers, many of which are also spending heavily on data centers and sliding into negative cash flow.

S&P pointed specifically to Meta’s recent launch of its Muse AI agent app and related foundation models. In CNBC’s account, the agency wrote that “it is unclear when these revenue streams will generate material contributions.”

S&P expects growth in Meta’s capital spending to flatten starting in 2028, CNBC reports. But the agency said it is less certain than before that Meta will rein in its spending as it had previously been expected to do.

A Meta spokesperson responded to CNBC with a statement: “We respectfully disagree with S&P’s assertion about Meta’s AI monetization capabilities.” The spokesperson added that the company sees significant product and business opportunities ahead and that these support its credit profile, which the company described as very strong.

The cash flow behind the warning

Meta’s third-quarter report, released the week before S&P acted, gave the agency a clear set of numbers to work from. CNBC reports that Meta’s full-year capital expenditure guidance is $135 billion to $145 billion and that its free cash flow for the quarter was negative $2.12 billion, which CNBC describes as the first time Meta has gone into the red.

Reuters, in a report published by The Star of Malaysia, adds context: in the same quarter a year earlier Meta generated positive free cash flow of $10.63 billion, and the new deficit was its first in more than a decade. A summary of Reuters reporting on the Finimize site is more specific, calling it the first cash-flow-negative quarter since 2012 and noting that the bottom of Meta’s capital spending range rose to $135 billion from $130 billion.

Revenue beat expectations, CNBC reports, yet Meta shares fell 7% after the report and the stock finished October down 15%, its worst month in four years. The Finimize summary of Reuters gives a 6.1% fall for the Thursday session. The two reports do not reconcile the figures.

On the balance sheet, Reuters reports that Meta held $82.45 billion in cash, equivalents and marketable securities and $80.92 billion in long-term debt as of September 30. The same report says the company has committed to about $825 billion in future spending, mostly on data centers, AI infrastructure and cloud computing.

The $95 billion financing plan

On Monday, October 26, four days before S&P’s action, Meta announced a plan to raise $95 billion for its AI work, CNBC reports. The first $35 billion would come from underwritten public equity offerings, and the remaining $60 billion from an at-the-market program, in which shares are sold gradually at prevailing prices.

Reuters reported the next day that Meta had enlarged the underwritten portion. It consists of $25 billion of common stock priced at $625 a share and $12.5 billion of convertible preferred depositary shares, 250 million of them at $50 each. With the $60 billion program, that comes to $97.5 billion. Reuters said Meta had not finalized the timing or terms of the at-the-market program, and that sales are expected to begin after planned non-voting Class C shares start trading in the first quarter of 2027.

Reuters also reported that Nvidia and AMD announced investments of $3 billion and $1 billion in the equity offering, and that Nvidia, AMD and Broadcom together showed interest in buying up to $5 billion of Class A shares. The report noted concern that capital is circulating within the AI sector, with chipmakers helping to finance one of their biggest customers.

Analysts at William Blair, quoted by Reuters, said they expect investors to keep questioning the financing and the potential for future capital raises. The same firm said it believes Meta will ultimately build a profitable AI business, although the path may not be a straight line.

CNBC’s account of the S&P decision does not say whether the agency weighed the equity raise, which was announced four days earlier, in reaching its view. Lens did not find that point addressed in the sources it opened.

How credit markets have read the spending

Credit-default swaps, insurance-like contracts that pay out if a borrower defaults, have moved in the same direction as S&P’s outlook. The Finimize summary of Reuters, which cites Markit data, says the price of Meta’s five-year contract rose 7.6 basis points to 114.79 basis points, a record. It says Oracle’s five-year contract was near a record and Amazon’s near its highest level since March 2020.

A separate report by 24/7 Wall St., published on October 30 in coverage of Microsoft’s bond sale, put Meta’s five-year contract at about 116 basis points, against roughly 54 for Microsoft and 275 for Oracle. The two figures for Meta are close but come from different outlets and dates, and Lens could not check either against Markit directly.

Meta is not alone in drawing cash faster than it earns it. CNBC’s coverage of Microsoft’s planned $25 billion bond offering says Microsoft reported positive free cash flow on Wednesday, October 28, while Alphabet reported negative free cash flow for a second straight quarter, Meta did so the week before and Amazon did so on Thursday, October 29. Reuters reported that Alphabet burned $9.07 billion in the third quarter. CNBC adds that Amazon and Alphabet have already issued bonds this year to fund infrastructure.

What to watch

Lens analysis: the outlook change leaves Meta’s rating intact but puts a major agency on record that spending, rather than revenue, is now the main credit question. Whether the outlook turns into a downgrade depends on facts that are not yet known, including whether capital spending growth flattens in 2028 as S&P assumes, whether Muse and the new models produce the revenue streams S&P says are unclear, and how the equity proceeds change the company’s financial position.

The sources Lens opened do not report whether Moody’s or Fitch has changed its view of Meta, and they do not give S&P’s criteria for moving from a negative outlook to a lower rating. Meta’s next quarterly report will show whether capital spending and free cash flow track the guidance S&P used. The company’s equity offering, and the timing of its Class C share issuance in January 2027, will show how much of the funding comes from new shares rather than debt.

For now, the two sides disagree about the same facts. S&P sees an unproven payoff from very large spending. Meta sees opportunities that justify it and a credit profile it calls very strong. Investors will get more evidence from each quarter’s cash flow and from how the new shares are received.

Sources

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