S&P moves Meta's outlook to negative over AI data centre spending.
S&P Global Ratings has revised its outlook on Meta Platforms to negative from stable while keeping the company's AA- credit rating. The agency warns that leases for AI data centres could push Meta's debt measure past its downgrade threshold as early as 2027.
The move came on 30 October, according to PPC Land's reading of the S&P report. S&P now expects Meta's capital spending to reach $140bn in 2026, more than $225bn in 2027 and $252bn in 2028, up from its earlier forecasts of $163bn and $178bn for the last two years. On those numbers Meta would run free operating cash flow deficits of $22bn, $71bn and $39bn, where S&P had previously expected cash flow to turn positive by 2028. Because S&P treats data centre leases as debt, it sees leverage rising above its 1.0 times threshold in 2027 and to 1.3 times in 2028. Future lease commitments stand at $355.7bn, up from about $279bn in the second quarter.
S&P's sharpest point concerns how Meta earns back the money. Alphabet, Amazon and Microsoft rent computing power to outside customers, so their data centres bring in revenue directly. Meta's return depends mostly on AI improving the targeting, ranking and creative of its ads, and on new products such as its AI assistant earning money. A negative outlook is a warning, not a downgrade. Meta has raised $37.5bn in new equity and plans a further $60bn programme from January 2027, which S&P left out of its forecasts.
Meta has not yet given its own 2027 spending guidance, so S&P is forecasting ahead of the company. The full report sits behind S&P's subscription wall, so the figures here come through PPC Land's account of it, and it is not yet clear how Meta will respond in its own plans.
For marketers in Saudi Arabia and the Gulf, where Meta's apps carry a large share of social budgets, the rating action changes nothing on the bill today. It does explain the direction of travel: Meta needs its AI spending to show up in ad revenue, so expect continued pressure towards automated campaigns, AI-made creative and new paid formats. Keep judging those tools on your own results rather than Meta's promises.
Why it matters
Meta's AI bill now carries a credit warning, which raises the pressure to turn that spending into ad revenue through more automation and new ad products.
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