---
title: "Meta raised $37.5 billion, then S&P cut its credit outlook to negative on $71 billion of 2027 cash deficits"
description: "S&P Global Ratings cut Meta's credit outlook to negative on Friday, saying Meta's ability to monetize its AI investments is \"more limited than that of its peers.\" The verdict landed one day after Meta closed $37.5 billion of stock offerings, money for a buildout that turned its free cash flow negative for the first time since 2012."
publisher: "The Inference"
section: "Data Center"
published: 2026-10-30T23:15:07.268Z
modified: 2026-10-30T23:15:07.268Z
canonical: https://theinference.org/article/meta-raised-37-5-billion-then-s-p-cut-its-credit-outlook-to-negative-on-71-billion-of-2027-cash-deficits
language: en
keywords: "Meta Platforms, S&P Global, Credit Ratings, Capex, AI Spending"
---

# Meta raised $37.5 billion, then S&P cut its credit outlook to negative on $71 billion of 2027 cash deficits

> S&P Global Ratings cut Meta's credit outlook to negative on Friday, saying Meta's ability to monetize its AI investments is "more limited than that of its peers." The verdict landed one day after Meta closed $37.5 billion of stock offerings, money for a buildout that turned its free cash flow negative for the first time since 2012.

## The verdict landed one day after the money

[S&P Global Ratings](https://theinference.org/markets/companies/s-p-global-ratings) cut [Meta](https://theinference.org/markets/companies/meta) Platforms' [credit outlook to negative on Friday October 30](https://www.bloomberg.com/news/articles/2026-10-30/meta-s-credit-rating-outlook-downgraded-to-negative-by-s-p), from stable, and left the AA- rating itself standing [1][2]. The language went further than most outlook cuts: "Meta's ability to monetize its AI investments is more limited than that of its peers," with no clear date for when the spending earns more than it costs [1].

The agency's own arithmetic is blunt: [free operating cash flow deficits of $39 billion this year and $71 billion in 2027](https://www.msn.com/en-us/money/companies/s-p-global-revises-metas-outlook-to-negative-on-ai-spending-cash-flow-worries/ar-AA2grekA), leverage passing its 1.0x AA- threshold as early as 2027, and a 2028 shortfall funded entirely with debt [3].

## The raise was the rating defense

The timing is the point. On October 29 Meta closed [$12.5 billion of 6.50% Series A mandatory convertible preferred](https://finance.yahoo.com/markets/stocks/articles/meta-announces-pricing-offering-depositary-050100930.html), fixed-dividend stock that automatically converts into common shares around August 2029 [4][5]. Alongside it came $25 billion of common stock sold at $625 a share through forward agreements, contracts that pay Meta about $24.9 billion only when they settle, due by November 19, 2027 [4][5]. Preferred adds capital without adding debt. In a market repricing AI credit, that is what a rating defense looks like, and S&P moved anyway.

## Capex outran the cash engine

The third quarter forced the issue: free cash flow printed negative $2.12 billion, Meta's first red quarter since 2012, on capital spending of $33.9 billion [2][6][7]. Full-year capex guidance runs to $135–145 billion [2]. Advertising revenue still grew 26% [8].

*Chart: **Quarterly capex has quadrupled in two years and pushed free cash flow negative** Line chart of Meta quarterly capital expenditure and free cash flow from Q2 2024 to Q3 2026, capex climbing from about $8 billion to $34 billion while free cash flow turns negative.*

*Meta quarterly figures from SEC filings, US$ billions; free cash flow here is operating cash flow less capital expenditure. Meta's reported free cash flow, which also nets finance-lease payments, was negative $2.12 billion in Q3 2026. Source: Meta SEC filings [7]. [7]*

The same strain is showing across the big spenders. The four biggest have outlined more than $740 billion of 2026 capital spending [8]; [Microsoft](https://theinference.org/markets/companies/microsoft) has not published one full-year figure, and that four-company total implies its plan also tops Meta's. The five largest, [Oracle](https://theinference.org/markets/companies/oracle) included, raised $326 billion of debt this year, triple 2025 [8]. [Alphabet](https://theinference.org/markets/companies/alphabet) logged a second straight negative quarter, [Amazon](https://theinference.org/markets/companies/amazon) [a $42.4 billion trailing outflow](https://theinference.org/article/amazon-on-tape-ai-stays-free-cash-flow-negative-for-years-3-billion-of-nvidia-racks-monthly); only Microsoft stayed positive, at $18.6 billion [8]. The Nasdaq 100 fell 3.5% on Friday and briefly crossed into correction [1].

*Chart: **Meta's 2026 capex plan trails Amazon and Alphabet** Bar chart of full-year 2026 capital spending guidance: Amazon $220 billion, Alphabet $205 billion, Meta $145 billion.*

*Company guidance for full-year 2026 capital spending, US$ billions; Meta is drawn at the top end of its guided range. Sources: TechCrunch [8]; CNBC [2]. [8][2]*

## The next raise is the tell

Meta's answer is blunt. "We respectfully disagree with S&P's assertion about Meta's AI monetization capabilities," a spokesperson said, pointing to a "very strong credit profile" [2]. Equity buyers keep showing up: the common sale [drew roughly $125 billion of orders, five times the stock offered](https://finance.yahoo.com/markets/stocks/articles/meta-25-billion-stock-sale-110657604.html), including $3 billion from [Nvidia](https://theinference.org/markets/companies/nvidia) and $1 billion from [AMD](https://theinference.org/markets/companies/amd), chip suppliers funding their own customer [6].

Yet insuring Meta's debt cost a record 127 basis points on October 23, the week before the sale [6]. Shareholders carry the bill: they supplied the $37.5 billion, and they wear the dilution when the forwards settle and when Class C shares arrive, [a new non-voting share class Meta created this month](https://theinference.org/article/meta-s-new-share-class-funds-ai-and-lets-zuckerberg-sell-20-of-it-for-a-possible-california-wealth-tax) [4][6]. The $60 billion at-the-market program, a facility to sell shares gradually into the market, is still only an intention and cannot start before early 2027 [2][6].

## The downgrade path runs through leverage

Bondholders hold the other watch: S&P's path to a one-notch downgrade runs through leverage, and the agency already dates the crossing to 2027 [3]. The form of the next dollar raised is the tell: more preferred means the debt door is closing, and a rush on the common means it never reopened. Until then the calendar does the watching: Class C debuts in late January 2027, the sales program cannot open before the first quarter, and the forwards pay out by November 19, 2027 [6].

## Takeaway

S&P kept Meta's AA- rating but turned the outlook negative, projecting free operating cash flow deficits of $39 billion in 2026 and $71 billion in 2027; whether the next dollar comes as preferred or common is the tell for the rating.

## Sources

1. [Bloomberg, "Meta's Credit Rating Outlook Downgraded to Negative by S&P," 30 October 2026](https://www.bloomberg.com/news/articles/2026-10-30/meta-s-credit-rating-outlook-downgraded-to-negative-by-s-p)
2. [CNBC, "Meta outlook revised downward by S&P on cash flow and capex concerns," 30 October 2026](https://www.cnbc.com/2026/10/30/meta-outlook-to-revised-to-negative-by-sp-after-cash-flow-negative.html)
3. [Reuters, "S&P Global revises Meta's outlook to 'negative' on AI spending, cash flow worries," 30 October 2026](https://www.msn.com/en-us/money/companies/s-p-global-revises-metas-outlook-to-negative-on-ai-spending-cash-flow-worries/ar-AA2grekA)
4. [Meta Platforms press release via PR Newswire on Yahoo Finance, "Meta Announces Pricing of Offering of Depositary Shares Representing Series A Mandatory Convertible Preferred Stock and Offering of Class A Common Stock in Connection with Forward Sale Agreements," 26 October 2026](https://finance.yahoo.com/markets/stocks/articles/meta-announces-pricing-offering-depositary-050100930.html)
5. [RTTNews, "Meta Upsizes Class A Stock Offering To $25 Bln, Prices $12.5 Bln Preferred Shares," 27 October 2026](https://www.rttnews.com/3703109/meta-upsizes-class-a-stock-offering-to-25-bln-prices-12-5-bln-preferred-shares.aspx)
6. [24/7 Wall St. via Yahoo Finance, "Meta's $25 Billion Stock Sale Drew Five Times the Demand," 28 October 2026](https://finance.yahoo.com/markets/stocks/articles/meta-25-billion-stock-sale-110657604.html)
7. [Meta Platforms, quarterly figures from its SEC filings (CIK 0001326801), retrieved 30 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001326801)
8. [TechCrunch, "Cracks are emerging in the AI spending boom," 30 October 2026](https://techcrunch.com/2026/10/30/cracks-are-emerging-in-the-ai-spending-boom/)


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Meta raised $37.5 billion, then S&P cut its credit outlook to negative on $71 billion of 2027 cash deficits — The Inference. Canonical: https://theinference.org/article/meta-raised-37-5-billion-then-s-p-cut-its-credit-outlook-to-negative-on-71-billion-of-2027-cash-deficits