Meta’s rating outlook cut to negative by S&P on AI spending
It comes as investors scrutinise Meta’s ability to generate tangible returns from AI investments
S&P Global Ratings has lowered its outlook for Meta Platforms' credit rating to negative, citing concerns over the company's ability to generate returns from its expanding AI investments. The decision follows a steep decline in the Nasdaq 100, which fell 3.5% due to disappointing tech earnings. S&P lowered Meta's credit grade from AA- to negative, reflecting uncertainty around the company's ability to monetize its AI investments and generate positive free cash flow.
The rating firm believes Meta's capital expenditures could reach $140 billion this year, accelerating to over $225 billion by 2027. While Meta remains in high-grade territory, a one-notch downgrade would still be considered solid. The company has been borrowing heavily to fund its AI ambitions, with leverage potentially surpassing one time next year.
Meta's executives remain confident in their aggressive investment strategy, with CFO Susan Li stating that the company plans to continue investing aggressively in both core business and AI initiatives.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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