Meta's credit risk hits record high as AI spending plans grow

The cost of insuring Meta Platforms' debt against default hit an all-time high on Thursday, driven by investor concerns over its increased AI spending plan. Meta raised its annual capital expenditure forecast to between $135 billion and $145 billion, up from a previous $130 billion to $145 billion. Five-year credit default swaps widened 7.6 basis points to a record 114.79 bps, while shares fell 6.1% to $655, their lowest in six weeks. Meta also introduced new non-voting shares and reported a $2.12 billion free cash flow deficit in Q3, its first negative cash flow since 2012. The broader AI sector saw heavy losses, with chip stocks erasing over $688 billion in market value and firms like CoreWeave and Oracle also facing pressure.