S&P Global Ratings has revised its outlook on Meta Platforms to negative as the company's AI spending pushes free cash flow below zero. Meta's stock fell after the Q3 2026 results, while Wall Street analysts raised price targets.
S&P Global Ratings revised its outlook on Meta Platforms to negative. The revision coincides with Meta's Q3 2026 earnings, a report that paired strong revenue growth with a cash flow figure the company has not posted in years.
Strong revenue, negative cash flow
Meta reported revenue of $64.6 billion, a 26% increase from the same period a year earlier. Further down the statement, free cash flow came in at approximately -$2.12 billion, the first negative figure in more than a decade.
Spending explains the gap. 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 money spent on long-lived assets such as data centers, servers and chips.
Meta also plans to invest approximately $825 billion in future data center and AI infrastructure.
A financing plan built around equity
Meta has outlined plans for a new class of non-voting shares, along with possible equity raises, to fund the build-out without taking on additional debt. Non-voting shares would let the company raise capital without diluting control.
S&P had signaled concern earlier. Its notes 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 a ratings downgrade, but it indicates which direction the agency is leaning.
Stock slides while analysts raise targets
Investors reacted quickly. Meta's stock fell 7% following the results.
The credit market moved as well. Meta's five-year credit default swaps reached 114.79 basis points on Oct. 22, 2026.
Equity analysts took a more favorable view. Multiple Wall Street analysts raised their price targets after the report while keeping favorable ratings on the stock, largely because of the strength of Meta's core advertising business.
What to watch next
For bondholders, a future downgrade could raise Meta's borrowing costs, which helps explain the lean toward equity over debt. Investors will watch whether Meta's free cash flow turns positive again and how large any equity raise turns out to be.
Source: Crypto Briefing
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