S&P Global cuts Meta outlook to negative on heavy AI spending

S&P Global Ratings downgraded Meta Platforms' outlook from stable to negative on Friday, citing uncertainty over prolonged high capital expenditures and negative free cash flow. The agency now projects Meta's capital spending will reach $140 billion this year, accelerating to over $225 billion in 2027 and $252 billion in 2028. S&P expects free cash flow deficits of $22 billion in 2026 and $71 billion in 2027, with a return to positive cash flow no longer anticipated by 2028. Meta's ability to monetize AI investments is seen as more limited than peers, though it plans to use improved advertising tools and new revenue from agentic applications. The company reported a $2.1 billion free cash flow deficit in Q3 2026, with lease obligations rising to $355.7 billion.