AI outlook: OpenAI cuts fundraising goal while Meta gets a credit warning on cash flow and spending

S&P Global Ratings maintained Meta Platforms' AA- rating but revised its outlook to negative, citing uncertainty over capital spending and AI monetization. Shares fell 1.53% to $614.99, with a market value of $1.36 trillion. S&P forecasts increased capex and negative free cash flow through 2028, raising leverage concerns. Meta disputes S&P's assessment, highlighting growth opportunities.

Poland is leading an EU effort to penalize Meta (€250M fine) for alleged failures in addressing fraudulent ads, citing systemic issues and insufficient data sharing. Meta claims its measures are effective, but Poland and other EU countries seek stricter enforcement under the Digital Services Act. Meta's response and compliance are under scrutiny, with broader implications for EU tech regulation.

France's National Assembly passed a 5.5 euro cent per gigabyte tax on content providers like Netflix, Google, and Meta, with a 15% or 2% revenue cap. The tax aims to raise about $11.2 billion annually, but its future is uncertain. Netflix, Alphabet, and Meta's stocks showed minor movements unrelated to the vote.

S&P revised Meta's outlook to negative, citing high AI capex forecasts of $225bn in 2027 and $252bn in 2028, up from earlier estimates. It expects free cash flow deficits of $22bn, $71bn, and $39bn for 2026-2028, respectively. The agency warns Meta's debt may exceed its downgrade threshold due to data center leases.

France's National Assembly voted 11-10 to impose a €0.055 per gigabyte tax on data traffic from companies like Google, Meta, Amazon, Netflix, and Akamai, aiming to raise €10 billion. The tax would be measured by internet providers and capped at 15% of French revenue or 2% of total revenue. The government opposes the measure, and the bill remains in early stages of the budget process.

Meta Platforms' stock fell 12% post-Q3 earnings despite revenue of $64.6B and EPS of $3.83. The drop followed a $135B-$145B capex plan, negative free cash flow of $2.1B, and a new non-voting stock class. Analysts estimate a $95B equity raise, impacting 2027 EPS forecasts. Meta plans to fund AI initiatives with new shares and reallocated investment.