Meta’s Cash Deficit Could Reach $71 Billion in 2027 as S&P Cuts Outlook to Negative
Key Facts
S&P Global Ratings lowered its credit outlook on Meta Platforms to negative from stable, projecting free operating cash flow deficits of $39 billion in 2026 and $71 billion in 2027. The agency said the move reflected uncertainty over capital spending and free operating cash flow as the company expands its AI investments. It left the issuer rating unchanged at AA-; the action applies to the outlook. The review follows Meta’s raising the range of its annual capital spending forecast for 2026, while third-quarter results showed a free cash flow deficit. The projections put the financing pressure from that expansion at the center of the company’s credit assessment.
The agency expects free operating cash flow to remain negative after 2028 if spending stays high, and expects Meta to finance its entire cash deficit in 2028 with debt. The estimate links current spending with subsequent financing needs as the company continues building its AI capabilities. S&P said, "High spending could keep free operating cash flow negative after 2028," adding that the company would finance that year’s cash deficit entirely with debt. The free cash flow deficit was $2.12 billion in the third quarter of 2026, according to Reuters via Marketscreener. Those figures shift attention from the scale of investment alone to its effect on available cash and the company’s ability to cover costs from its operations.
Meta raised the lower end of its 2026 capital spending forecast to $135 billion, from a previous range starting at $130 billion, and kept the upper end at $145 billion. The adjustment came after the company recorded a free cash flow deficit in the third quarter, while it gave no spending forecast for 2027, according to the Associated Press. Raising the lower end means the expected spending range widened from $130–145 billion to $135–145 billion. Third-quarter revenue rose 26% year over year to $64.60 billion, compared with $51.24 billion in the same period of 2025. Revenue growth provides a counterpoint to the deficit projections, while the cost of rising capital investment remains the focus of the agency’s concerns.
S&P says Meta’s ability to turn AI investments into revenue is more limited than that of its peers, and the timing of new revenue surpassing rising costs is unclear. The agency linked the difficulty of estimating returns to a lack of clarity about future capital spending and to what it described as highly ambitious multiyear investment plans. In this context, it said, "Meta’s ability to generate revenue from its AI investments is more limited than that of its peers." This gap between spending and expected returns leaves the timing of improved cash flows in question in S&P’s assessment. Meta, meanwhile, said it disagreed with the agency’s assessment of its ability to generate revenue from AI, saying it had significant product and business opportunities that supported its strong credit profile.
Mark Zuckerberg said the company’s investments were paying off and its core business was strong, pointing to the launch of Muse and Muse Wonder as the company’s first two advanced models, according to the Associated Press. He said, "Our investments are paying off, our core business is strong, and we are seeing momentum across the board." The response comes as management and the agency differ in their assessment of the returns on AI spending: the company says investment is supporting its business, while S&P is cautious about how quickly revenue will emerge. On the financing front, Meta plans to sell $97.5 billion in shares to fund its AI expansion, according to Reuters via Marketscreener. S&P also expects leverage to exceed 1.0 times by 2027, the threshold the agency sets for an AA- issuer rating.
The company reported long-term debt of $80.92 billion as of September 30, 2026, putting borrowing projections alongside its existing debt base. In response to the outlook review, Meta said, "We respectfully disagree with S&P’s assertion about Meta’s ability to generate revenue from AI." The stock’s close at $614.99 on October 30, 2026, shows the share price in the latest EL7 data available in the article. Meta shares closed up 0.5% in regular trading on October 21, then rose 2.9% after hours following the earnings announcement, according to the Associated Press. An S&P Global Ratings official said that continued high capital spending, growing faster than expected, would keep weakening credit profiles and keep cash flows negative.