[Photo Credit: Reuters]

S&P Global Ratings on Friday revised its outlook on Meta Platforms (META.O), opens new tab to “negative” from “stable”, citing significant uncertainty around the social media giant’s capital spending and free operating cash flow.

Big Tech has historically ​spent heavily on cloud computing, online advertising and e-commerce, but the AI boom ‌has pushed capital expenditure to dizzying levels, stoking investor concerns about whether the sector can generate returns quickly enough.

Last week, Meta forecast annual capital expenditure between $135 billion-$145 billion after reporting a free cash flow deficit ​of $2.12 billion in the third quarter. Meta is also planning to tap public ​markets and sell $97.5 billion in stock to fund the AI buildout.

Meta’s ability to ⁠monetize its AI investments is more limited than that of its peers, S&P said, adding it ​was unclear when its revenue streams would generate material contributions exceeding their rising costs over ​the next few years.

S&P now forecasts Meta will generate FOCF deficits of $39 billion in 2026 and $71 billion in 2027.

The agency said elevated spending could keep FOCF negative beyond 2028 and expects Meta to fund its 2028 ​cash shortfall entirely with debt.

The ratings agency said it believes Meta’s leverage could rise to above 1.0x as early as 2027, which is S&P Global’s threshold for the “AA-” issuer credit rating.

Meta’s leverage increased from 0.1x in 2025, primarily due to its strategy of leasing ​data-center capacity rather than issuing debt, S&P said.

The company reported long-term debt of $80.92 billion as of ​September 30.

Earlier this year, S&P lowered cloud computing giant Oracle’s (ORCL.N), opens new tab credit rating to “BBB-“, one notch above “junk”, due to its ​heavily leveraged balance sheet.