S&P takes Meta's perspective to the negative, doubting its ability to make its spending in AI profitable

Note AA- is maintained, but the Agency is concerned about a negative cash flow and investments of $135 to $145 billion this year. Meta disputes.

S&P Global Ratings has lowered the outlook for Meta's credit rating from "stable" to "negative", while maintaining the AA- rating. The agency cites uncertainty related to the group's very high investments and its free cash flow, which went into the red in the third quarter (-$2.12 billion) for the first time.

S&P is especially questioning Meta's ability to monetize its investments in AI compared to its competitors, which are also spending heavily on data centers. Despite the launch of the Muse agent and new foundation models, the agency considers it uncertain when these activities will bring in more than they cost. It anticipates a spending cap from 2028, without being sure. Meta, which expects to invest between $135 billion and $145 billion this year and has just announced a $95 billion equity raise, says it "respectfully disagrees."

The stock ended October down 15%, its worst month in four years.