The cost of insurance against defaults by tech giants has hit a new all-time high
The rise in AI capital expenditures has led to a sharp increase in the cost of credit default swaps for a number of technology companies
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The cost of credit default swaps (CDS) on the debt of several major U.S. tech companies—which act as insurance against bankruptcy—hit new all-time highs on Friday, according to Bloomberg. Records were set for Intel, Broadcom, and Amazon, as well as Microsoft, Alphabet, and SpaceX, while Advanced Micro Devices’ CDS spread rose to its highest level since early 2019. Weak quarterly reports from Intel and Amazon sparked a new round of concerns about the viability of debt financing for the AI boom.
Details
According to ICE Data Services, the cost of five-year credit default swaps on Intel bonds jumped 22.4 basis points on Friday morning, reaching a record high of 127.9 basis points per year. Amazon’s spread also hit a historic high, rising 6.9 basis points to 94 basis points per year. The day before, the company reported capital expenditures that exceeded expectations and the slowest growth in three years for its core business—e-commerce.
Credit risk indicators for other hyperscalers—Microsoft, Alphabet, and SpaceX—also reached record highs on Friday.
The tech giants’ weak results are fueling doubts about the sustainability of the AI borrowing boom, while the companies themselves continue to ramp up capital expenditures, according to Bloomberg. According to the agency, nearly $500 billion in debt has been raised for data centers, chips, and other AI projects since the beginning of 2026, compared with about $200 billion for all of 2025.
What People Are Saying in the Market
Concerns over a flood of new bonds are prompting the market to reassess risks. AI borrowers now account for nearly 14% of all outstanding corporate CDS contracts in the U.S., up from 4% a year earlier, according to Barclays credit strategists Brad Rogoff and Dominic Tublan. “Credit markets have not yet shaken off the pressure,” they write in a Friday note. “Even with other sources of financing available, there is still a significant volume of public offerings ahead.”
This article is being updated
This article was AI-translated and verified by a human editor
