S&P Expects Meta to Post $71 Billion Cash Deficit in 2027
Key Facts
S&P Global Ratings revised its outlook on Meta to negative while affirming its AA- credit rating, expecting free operating cash flow deficits of $22 billion in 2026, then $71 billion in 2027, before narrowing to $39 billion in 2028. That trajectory puts the company's AI expansion under mounting funding pressure, as the agency expects Meta to finance its 2028 cash deficit entirely with debt. S&P said, "Meta's ability to generate revenue from AI investments is more limited than that of its peers." It added that the timing of those revenues contributing to cover rising costs remains unclear. The outlook revision comes as the company continues to increase capital spending to support its core business and AI projects.
Meta raised its 2026 capital expenditure forecast to a range of $135 billion to $145 billion, compared with a previous range of $130 billion to $145 billion. The company did not provide an estimate for 2027 spending, but said it expects to continue investing heavily to support its core business and AI operations. In the third quarter, capital expenditure, including payments on finance lease liabilities, totaled $34.91 billion. S&P said the lack of clarity around multiyear spending plans made it "less certain that Meta will reduce spending as previously expected." The absence of company guidance for 2027 spending means the agency's deficit estimates for subsequent years coincide with Meta's continued investment commitments, without an annual figure disclosed by the company for that year.
Third-quarter results show strong growth in advertising activity, with Meta revenue rising to $64.60 billion, up 26% from the same period in 2025. Ad impressions across the company's apps increased 10% year over year, while the average ad price rose 14%. The average number of daily active people across Meta's family of apps reached 3.64 billion in September, up 3% from a year earlier. But revenue momentum is coinciding with major infrastructure investment, with capital expenditure totaling $34.91 billion in the third quarter. The divergence between ad growth and capital spending reflects the focus of S&P's assessment: the agency sees Meta's ability to turn AI investments into revenue as less clear than that of its peers.
Meta plans to sell $97.5 billion in shares to fund AI infrastructure construction; this is an announced financing plan, not a completed sale. S&P, meanwhile, expects the company to finance its 2028 cash deficit entirely with debt, putting equity funding for expansion alongside expected reliance on borrowing in a later year. The company's cash, cash equivalents and marketable securities totaled $82.45 billion on September 30, 2026, while its long-term debt stood at $80.92 billion. The agency expects leverage to exceed 1.0x in 2027, a level it associates with an AA- issuer rating. A Meta spokesperson said, "We respectfully disagree with S&P's assertion about Meta's ability to generate returns from AI," adding that product and business opportunities support the company's credit profile.
S&P's sector lead for media and telecommunications said continued elevated spending at a faster-than-expected pace "will weaken credit profiles and keep cash flows negative." Meta forecast fourth-quarter revenue of $73 billion to $76 billion, while analysts' average estimate was $73.65 billion at the time of the Associated Press report. The agency said the free operating cash flow deficit could continue through 2028, before narrowing to $39 billion, its estimate for that year. On the product front, Mark Zuckerberg said the company expects to improve the cost efficiency of running Muse by more than 10-fold over the next year, which could enable profitability once revenue sources reach scale. The company's ability to convert this spending into revenue, alongside expected funding needs, remains central to the agency's negative outlook.
The stock moved amid news of spending and results. In Monday's session on October 26, after the share sale plan was announced, it initially fell more than 2% before turning higher, then ended the session down 1.9%. EL7 data show the stock closed at $630.56 on October 26, then at $614.99 on October 30. After the third-quarter results were announced, the stock fell 7% on Thursday, its worst daily performance since July, according to Kiplinger. These moves put investors' response to spending alongside near-term quarterly revenue expectations and the extended investment plan. The company has not set a 2027 spending figure, saying only that it will continue investing heavily, while S&P's deficit and leverage estimates remain focused on the impact of this trajectory in the coming years.