S&P Global Ratings lowered the outlook on Meta’s “AA-” credit rating from stable to negative, citing rising leverage and uncertainty over how long capital spending will remain high and free operating cash flow negative. According to Sina Finance, the change means S&P could downgrade Meta’s credit rating within two years.

S&P said Meta’s ability to turn AI investment into revenue was more limited than that of its peers, and that it was unclear when the investments would generate substantial revenue exceeding rising costs. S&P expects Meta’s capital spending to reach $140 billion this year and accelerate to more than $225 billion in 2027. Meta’s own latest forecast puts full-year capital spending at $135 billion to $145 billion. S&P expects spending growth to level off starting in 2028, but said it was uncertain whether Meta would cut spending as previously expected.

Meta spokesperson Kamran Mumtaz said the company respected S&P’s judgment but disagreed with its assessment of Meta’s ability to monetize AI investment, adding that product and business opportunities would support a strong credit profile. Meta’s leverage ratio could exceed 1.0x as soon as next year, up from about 0.1x last year. The company’s future spending commitments rose from about $700 billion in July to $825 billion as of October 22, with nearly half tied to leases not yet underway, mainly for data centers and energy infrastructure.

Meta’s free cash flow was negative $2.12 billion in its last quarter, its first move into negative territory. Its shares fell 15% in October, the largest monthly decline in four years. Meta’s “AA-” rating is S&P’s fourth-highest investment-grade rating; a one-notch downgrade would still leave it in the upper investment-grade range.