Meta Platforms is facing rising concerns over the cost of its artificial intelligence expansion, with a key measure of the company’s credit risk climbing to a record high following its latest financial results. The cost of insuring Meta’s debt against default rose by 7.3 basis points to 114.5 basis points on Monday, according to reports. The increase marked the biggest single-day jump in the company’s five-year credit default swaps (CDS) since at least 2025.
The rise suggests that some investors are becoming more cautious about the financial risks associated with Meta’s growing investment in AI infrastructure, even as the company reports strong revenue growth.
Meta has been spending heavily on data centres, advanced chips and computing capacity to support its AI models and products. The company is competing with major players such as OpenAI, Google and Anthropic, making access to computing resources an increasingly important part of its strategy.
Meta now expects its capital expenditure for 2026 to reach between USD 135 billion and USD 145 billion, narrowing its previous forecast of USD 130 billion to USD 145 billion. Chief Executive Mark Zuckerberg has also indicated that the company intends to continue investing aggressively in AI next year.
While these investments could support future growth, they are putting pressure on cash flow and raising questions about how quickly Meta can turn its spending into returns.
Meta reported third-quarter revenue of USD 64.6 billion, up 26% from a year earlier and ahead of analysts’ expectations. The company also forecast fourth-quarter revenue of USD 73 billion to USD 76 billion, signalling continued momentum in its core advertising business.
However, its financial results included a USD 9.89 billion charge related to a legal settlement involving claims brought by US state attorneys general. Meta reported diluted earnings of USD 3.83 per share, compared with USD 7.40 excluding that charge. The company also recorded negative free cash flow of USD 2.12 billion for the quarter, compared with positive free cash flow of USD 10.63 billion a year earlier.
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Credit default swaps allow investors to hedge against the risk that a borrower will fail to meet its debt obligations. When CDS prices rise, it generally becomes more expensive to insure that debt, reflecting increased concern about credit risk.
Meta’s record-high CDS level does not mean the company is close to default. Instead, it points to greater caution among investors as they assess the financial implications of its AI spending plans.
For Meta, the challenge will be to maintain growth in advertising and AI products while managing the cost of building the infrastructure needed to compete in the rapidly expanding AI market.