Meta’s Future Spending Commitments Surge to $825 Billion, Credit Risk Indicators Hit Historical High

The direct catalyst for this market volatility was Meta's post-earnings disclosure of its latest spending commitments. According to the regulatory filing submitted on Thursday, Meta has struck agreements for about $825 billion in future expenditures across leases and contracts, with most related to AI computing power and infrastructure.

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

By comparison, Meta’s previously disclosed future spending commitment in July was about $700 billion, making this latest disclosure a significant jump in total obligations within just a few months.

According to ICE Data Services, on Thursday, Meta’s five-year CDS price jumped as much as 8.9 basis points in a single day to around 119.3 basis points, setting an intraday record since the contract began trading. Higher CDS prices mean investors are paying more to insure against default risk, and the sharp rise in this metric directly reflects market anxieties over Meta’s debt burden.

At the same time, the spread between Meta’s existing bonds and U.S. Treasuries also widened, putting downward pressure on its bond prices. The CDS prices of companies like Oracle, Microsoft, and Broadcom similarly climbed that day, indicating that concerns are not limited to Meta alone but are spreading across the entire tech sector with heavy AI investments.

It is worth noting that Meta’s AI expansion path fundamentally differs from that of competitors such as Microsoft, Alphabet, and Amazon—Meta typically does not sell computing power to external customers, meaning that the risks of over-investment in data centers are borne entirely by the company itself rather than being diversified through cloud customers.

During last Wednesday’s quarterly earnings call, investors repeatedly questioned CEO Mark Zuckerberg on whether there were any specific plans to launch cloud services, but Zuckerberg did not provide a clear answer. Meanwhile, Meta raised its full-year capital expenditure forecast in its earnings report and announced the issuance of a new class of non-voting stock, which could serve as payment for acquisitions and other expenditures in the future.

Currently, there are still doubts externally about whether Meta can generate sufficient returns from its massive AI investments. The rapidly climbing spending commitments and credit risk indicators are prompting bond market investors to reassess the cost of this high-stakes bet.