AI Spending Fuels Widening Big Tech Credit Risks
TL;DR Summary
Investors are wary of Big Tech’s AI-driven capex as credit-default swaps for Oracle, Nvidia, Alphabet, Amazon, Meta, Broadcom and others hit fresh highs; Oracle’s five-year CDS is around 215 bps and Nvidia about 79 bps, with Meta’s Texas data-centre borrowing costs moving toward junk; Oracle was downgraded to BBB- by S&P amid questions about profitability, while OpenAI/Nvidia discussions for a 10GW Ohio data-centre project highlight the scale of planned spend. Analysts warn AI financing outpaces cash flow, making CDS hedges more common and signaling rising credit risk in the sector.
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- NVIDIA's CDS surged to a record high, while Oracle was downgraded—when "revolving financing" hits the bond ceiling. Moomoo
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