S&P's negative outlook on Meta underscores the risks of the AI spending boom | Fortune

S&P Global Ratings revised its outlook on Meta Platforms to negative from stable while affirming its AA- credit rating, citing the company's elevated AI-driven capital expenditures and rising free cash flow pressure. The move underscores growing investor and rating-agency concern that Big Tech's AI spending boom—Meta's capex is projected at roughly $70 billion-plus—could erode balance-sheet strength if revenue growth fails to keep pace. The action follows Meta's report of strong revenue but sharply higher spending, with costs from data centers, chips, and infrastructure weighing on margins and free cash flow. It matters because Meta's debt-funded AI buildout has become a test case for whether hyperscalers can sustain massive outlays without credit deterioration, and a negative outlook can raise borrowing costs and constrain future financial flexibility. Watch next: whether Meta moderates its 2027 capex guidance, how its advertising revenue holds up against AI competition, and whether other rating agencies follow S&P's lead on Big Tech issuers.