S&P cuts Meta’s outlook and doubts its AI can pay its way

S&P now expects Meta’s capital spending to reach more than $225 billion in 2027 and $252 billion in 2028, and sees free operating cash flow negative in 2026, 2027 and 2028, according to PPC Land’s reading of the report. S&P’s concern centres on Meta renting new data centres under long leases, which the agency adds to its debt figure. The agency also said it is unclear when products such as the Muse assistant will bring in more than they cost.

In a statement to CNBC, Meta rejected S&P’s view of how well it can make money from AI and pointed to the business it expects to win. Its shares fell 15 per cent in October, their worst month in four years. On 27 October we reported its plan to raise $95 billion in new shares.

Meta’s ad tools show where the money from its AI comes in today. Our guide to Advantage+ creative lists background generation, image expansion and text variations, and our 31 October check finds no fee stated for any of them: advertisers pay for the ads.

S&P says Meta means to earn the money back through improved advertising tools and new apps such as Muse, and since Advantage+’s generative features carry no stated fee, their share of that payback can only show up as faster ad revenue.