On October 30, S&P Global Ratings revised its outlook on Meta Platforms from stable to negative while keeping the company's AA- issuer credit rating. The agency now expects Meta's AI build-out to push capital spending past $225 billion in 2027 and to keep free operating cash flow negative for three years. It is a warning, not a downgrade, but it puts a spotlight on the one business that has to pay for all of it: ads.
What S&P changed
S&P affirmed the AA- rating and switched the outlook to negative. A negative outlook means a downgrade is possible over the next couple of years if the numbers play out as forecast; it does not change Meta's rating today.
The trigger is spending. S&P now forecasts capex of about $140 billion in 2026, more than $225 billion in 2027 and $252 billion in 2028, well above its earlier forecasts. On those numbers it expects free operating cash flow deficits of roughly $22 billion in 2026, $71 billion in 2027 and $39 billion in 2028.
- Rating: AA- affirmed; outlook moved from stable to negative
- Leverage could pass S&P's 1.0x threshold as early as 2027 once data centre leases are counted as debt
- Future lease obligations reported at $355.7 billion, up from about $279 billion in Q2
- Meta has raised $37.5 billion in new equity and plans a further $60 billion programme from January 2027, which S&P left out of its forecast
Why the ad business is at the centre of it
S&P's core argument is that Meta can monetise AI less directly than Alphabet, Amazon or Microsoft, which rent cloud capacity to outside customers. Meta does not sell compute, so the return on its data centres has to come mostly through better ad ranking, targeting and creative tools, plus whatever it eventually earns from products like its AI assistant.
Meta has said it disagrees with S&P's view and plans to keep investing. The company has not yet published 2027 spending guidance; that is expected with fourth-quarter results in late January.
What it means on the buying side
Nothing changes in Ads Manager because of a credit outlook. But the direction of travel is clear: Meta needs its AI spend to show up as ad revenue, which means continued pressure to push automation (Advantage+, AI-generated creative, broader default placements) and to raise the value of each impression.
Expect more features switched on by default and more AI-led products tested on advertisers first. Recent examples include default product browsing and the AI-edit clauses in the revised ad terms. Buyers who keep tight control of their settings and measurement will be better placed to judge which of these actually pay off.
What it means for you
- A negative outlook is not a downgrade; ad delivery and billing are unaffected today.
- Meta's AI bill is funded mainly by ads, so expect more default-on automation in 2027.
- Audit Advantage+ and creative-enhancement toggles regularly instead of trusting defaults.
- Watch Meta's Q4 results in late January for 2027 capex guidance.
