S&P Global cuts Meta outlook to negative on AI capex

S&P Global's revision comes after last week's tech earnings, when Wall Street increasingly questioned the sustainability of the AI spending boom. The agency noted that Meta's leverage has risen from about 0.1x in 2025 to near 1.0x, largely because of Meta's strategy of leasing data-center capacity rather than relying solely on traditional debt financing. That lease-heavy approach makes Meta's balance sheet more sensitive to S&P's leverage threshold for its AA- rating.

The broader context is also shifting. OpenAI reportedly cut its latest fundraising target to $20 billion from $30 billion, and Alphabet had its worst day on record after reporting negative free cash flow for a second consecutive quarter. According to S&P, what sets Meta apart from other hyperscalers is its ability to monetize its investments. Rivals can lease compute capacity to frontier model labs and enterprise customers, while Meta is betting on better advertising tools and new revenue streams from agentic apps like Muse. But S&P said it is "unclear when these revenue streams will generate material contributions that exceed their rising costs," which is the core of its concern.