The credit agency's move lands alongside Meta's first negative free cash flow in more than a decade and a higher capex forecast
S&P Global Ratings has revised its outlook on Meta Platforms to negative. That is a polite way of saying one of the world’s most watched credit agencies is getting nervous about how the company pays for its AI ambitions.
The timing is hard to ignore. The revision coincides with Meta’s Q3 2026 earnings, a report that paired strong revenue growth with a cash flow number the company has not posted in years.
Great sales, awkward cash
On the top line, Meta delivered. Revenue came in at $64.6 billion for the quarter, a 26% increase from the same period a year earlier.
The trouble sits further down the statement. Meta recorded its first negative free cash flow in more than a decade, approximately -$2.12 billion for the quarter.
The reason is no mystery. Meta raised its 2026 capital expenditure guidance to a range of $135 billion to $145 billion, a $5 billion increase at the low end.
Capex is the money a company pours into long-lived assets like data centers, servers and chips. For Meta, the bulk of that bill is tied to building the infrastructure behind its AI push.
And the current year may be just the warm-up. Meta plans to invest approximately $825 billion in future data center and AI infrastructure spending.
How Meta wants to pay for it
The financing plan is where things get interesting for credit analysts. Meta has outlined plans for a new class of non-voting shares, along with possible equity raises, to fund its AI build-out without taking on additional debt.
Non-voting shares add another wrinkle. They would let Meta raise capital without diluting control over the company’s direction.
S&P had been signaling concern before this quarter. Earlier notes from the agency suggested Meta’s financial flexibility was narrowing, with projections pointing to rising leverage and declining discretionary cash flow through 2027.
An outlook revision is not the same as a ratings downgrade. It indicates which direction the agency is leaning on the rating over time.
The market reaction
Investors did not wait around. Meta’s stock fell 7% following the results.
The credit market moved too. Meta’s five-year credit default swaps reached 114.79 basis points on Oct. 22, 2026.
Credit default swaps work like insurance on a company’s debt. A buyer pays a regular fee, and if the borrower defaults, the seller covers the loss. When the price of that protection climbs, it means traders see more risk in lending to the company than they did before.
Equity analysts, meanwhile, took a sunnier view. Multiple Wall Street analysts raised their price targets after the report while keeping favorable ratings on the stock. Their optimism rests largely on the strength of Meta’s core advertising business, which continues to throw off the revenue that funds everything else.
What this means
For bondholders, the negative outlook is the headline risk. A future downgrade could raise Meta’s borrowing costs, which helps explain why the company is leaning toward equity rather than debt.
There are a few things worth watching from here. One is whether Meta’s free cash flow returns to positive territory or whether Q3 marks the start of a longer trend. Another is the timing and size of any equity raise, and how the market prices the non-voting shares if they arrive.
A third is S&P itself. The agency has now moved from warnings in its notes to a formal outlook change. Whether it takes the next step will likely depend on how Meta’s leverage and discretionary cash flow track against those projections through 2027.
