Quick Read S&P kept META at AA- but flipped its outlook to negative, saying AI monetization is “more limited than that of its peers.” S&P projects Meta’s leverage will hit 1.3x by 2028, past the 1.0x downgrade threshold, with the shortfall funded “entirely with debt.” Meta raised $37.5 billion through stock and convertible preferred, then
Quick Read
S&P kept META at AA- but flipped its outlook to negative, saying AI monetization is “more limited than that of its peers.”
S&P projects Meta’s leverage will hit 1.3x by 2028, past the 1.0x downgrade threshold, with the shortfall funded “entirely with debt.”
Meta raised $37.5 billion through stock and convertible preferred, then launched a $60 billion share program starting January 2027.
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On October 30, 2026, S&P Global Ratings maintained Meta Platforms (NASDAQ:META) at AA- and revised its outlook from stable to negative. S&P pointed to uncertainty about elevated capital spending and negative free cash flow, writing: “Meta’s ability to monetize its AI investments is more limited than that of its peers.”
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The shares fell 1.53% to close at $614.99, a market value of $1.36 trillion, and traded at $614.43 after hours. That close sits 1.6% below the $625 price Meta charged for new stock on October 26.
October was already Meta’s worst month in four years, down 15.2% from a $725.18 close, including a 6.98% drop on October 22. The ad business is growing fast, but the AI bill is growing faster, and shareholders now cover part of it.
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What S&P Kept and What It Flagged
S&P left the rating unchanged, and AA- remains among the highest credit ratings in tech, while a negative outlook is a formal warning that a downgrade becomes possible if the agency’s forecast holds.
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S&P wrote that “it is unclear when these revenue streams will generate material contributions that exceed their rising costs over the next few years.” Meta’s payback has to come through ads, engagement, and products still being built, because its model relies on its own apps rather than cloud-style computing rentals to outside customers.
Spokesperson Kamran Mumtaz replied, “We respectfully disagree with S&P’s assertion about Meta’s AI monetization capabilities,” adding, “We see significant product and business opportunities ahead of us, supporting our very strong credit profile.”
Capex Forecasts Push Leverage Past 1.0x
S&P sees capex of $140 billion in 2026 but raised 2027 to more than $225 billion from $163 billion and 2028 to $252 billion from $178 billion. Free operating cash flow, the cash left after running the business and buying equipment, shows a $71 billion deficit at its 2027 peak, after $22 billion in 2026. It stays $39 billion negative in 2028, the year S&P had previously expected it to turn positive.
Adjusted leverage, roughly debt divided by yearly operating earnings, rises from 0.1x in 2025 to 0.3x at the end of 2026, then 1.1x in 2027 and 1.3x in 2028, past the 1.0x downgrade threshold. S&P expects the 2028 shortfall to be funded “entirely with debt.” It sees capex growth “flattening out beginning in 2028” but is “less certain that it will curtail its spending as previously anticipated.”
How Meta Is Paying for the Buildout
Third-quarter revenue rose 26% to $64.6 billion. Net income of $9.86 billion, or $3.83 per share, took a $9.9 billion legal charge. Capex, including finance lease principal, reached $34.91 billion, free cash flow came in at negative $2.12 billion, and cash of $82.45 billion sat against $80.92 billion of long-term debt.
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Meta narrowed its 2026 capex guidance. It moved to $135 billion to $145 billion, up from a $130 billion low end, and said: “we expect to continue investing aggressively to support both our core business and emerging AI initiatives.”
It then sold $25.0 billion of Class A stock, upsized from $22.5 billion, along with $12.5 billion of mandatory convertible preferred paying 6.50%. That came to about $37.5 billion, with the forward sale set to settle by November 19, 2027. A $60 billion Class C at-the-market program, which sells shares gradually, starts in January 2027, and Meta also carries $355.7 billion of future lease obligations. Selling equity protects the rating, but it dilutes existing owners, and it is unusual for an AA- company to raise stock at this scale. Much of that cash is heading into the power, cooling, and networking that data centers need, and we analyzed seven suppliers positioned to catch it in a free report.
What Could Shift the Outlook for Meta Stock
At a P/E of about 23, the stock trades at a moderate multiple for advertising revenue that grew 26% as impressions rose 10% and price per ad rose 14%. The stock sales also show management supporting the balance sheet.
META Analyst Ratings — 24/7 Wall St.
Meta said it would give more specific 2027 guidance with its fourth-quarter earnings report. If that capex guide approaches S&P’s $225 billion without firm AI revenue targets, or if shares stay below $625, S&P’s concerns will likely carry more weight with investors.
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