Meta's future spending commitments rise to $825 billion, five-year CDS hits record high

Meta's financial commitments to artificial intelligence infrastructure continue to swell, drawing intense market scrutiny over its credit risk.

According to a regulatory filing Meta disclosed on Thursday, as of the end of September the company had committed to roughly $825 billion in future expenditures, covering leases, cloud computing contracts, data centers and other agreements, with a large share directly tied to AI computing capacity and infrastructure buildout. That figure is up sharply from the roughly $700 billion disclosed in July, an increase of more than $100 billion in just a few months.

Earlier, when Meta released its quarterly earnings on Wednesday, it raised its full-year capital expenditure plan and announced a new class of non-voting stock to provide a potential financing tool for future acquisitions and other spending. Meta's third-quarter free cash flow turned negative at -$2.12 billion, the first deficit in roughly 14 years since the company's 2012 listing; although revenue and AI business momentum beat expectations, net profit also fell well short of analyst forecasts.

On Thursday, after the U.S. market opened, Meta fell about 7%. The price of five-year credit default swaps (CDS) measuring Meta's credit risk soared to a record high, and the company's bonds weakened sharply relative to U.S. Treasuries. This reflects investors' deep concern: tech giants' continued borrowing to expand AI will further intensify pressure on an already oversupplied bond market. Meanwhile, CDS prices for hyperscalers and chipmakers such as Oracle, Microsoft and Broadcom also rose in tandem, showing that market wariness of debt risk across the tech industry is spreading.

Spending commitments jump from $700 billion to $825 billion

The direct trigger for this market swing was the latest spending commitment data Meta disclosed after its quarterly report. According to the regulatory filing the company submitted on Thursday, Meta has reached agreements for about $825 billion in future expenditures across various leases and contracts, most of them related to AI computing power and infrastructure.

Specifically, Meta has $355.7 billion in operating and finance leases not yet recorded on its balance sheet, covering data center and energy infrastructure leases taking effect progressively from the remainder of this year through 2036. In addition, as of September 30, the company had $454.5 billion in non-cancelable short- and long-term contracts, mainly involving third-party cloud computing capacity purchases, data center energy agreements, and consumer hardware products in its Reality Labs division. Meta also disclosed that it is committed to purchasing up to $14.7 billion in cloud computing capacity over five years, though that amount may be reduced if cloud providers sell the capacity to other customers.

By comparison, the future spending commitments Meta disclosed in July totaled about $700 billion, meaning the total has jumped sharply in just a few months.

Credit risk gauge hits historic extreme

According to ICE Data Services data, on Thursday Meta's five-year CDS price rose by as much as 8.9 basis points in a single day to about 119.3 basis points, the highest intraday level since the contract began trading. The higher the CDS price, the more investors pay for insurance against default risk, and the jump in this gauge directly reflects market unease over Meta's debt burden.

At the same time, the spread on Meta's existing bonds relative to U.S. Treasuries also widened, and bond prices came under pressure. CDS prices for peers such as Oracle, Microsoft and Broadcom also climbed that day, indicating that the market's concern is not limited to Meta but has spread across the entire tech sector that is investing heavily in AI.

Expansion logic is disputed

It is worth noting that Meta's AI expansion path differs fundamentally from competitors such as Microsoft, Alphabet and Amazon — Meta generally does not sell computing power externally, meaning the risk of overinvesting in data centers falls entirely on the company itself rather than being spread through cloud service customers.

On the previous quarterly earnings call, investors repeatedly pressed Chief Executive Mark Zuckerberg on whether he had specific plans to launch a cloud services business, but Zuckerberg gave no clear answer. Meanwhile, Meta raised its full-year capital expenditure forecast in its quarterly report and announced the issuance of a new class of non-voting stock, which could be used in the future to pay for M&A and other expenses.

At present, doubts remain over whether Meta can earn sufficient returns from its massive AI spending, and the ever-rising spending commitments and credit risk gauges are prompting bond market investors to reassess the cost of this big bet.

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