Cost of AI Default Insurance Spikes as Data Center Confidence Wobbles

3-line summary

• Five-year credit default swap (CDS) spreads on several AI-linked companies widened sharply overnight, per a Reuters report cited by Investing.com, citing S&P Global Market Intelligence and LSEG data: Oracle's CDS spread jumped 26bp to a record 288bp (meaning $2.88 to insure $100 of its bonds); SoftBank's widened 24bp to 424bp; and CoreWeave's surged past 1,000bp. CoreWeave carries about $50 billion in debt, with its 2032 bonds trading at 77 cents on the dollar; its shares fell 15% Wednesday and another 6% after-hours. Amazon, Alphabet, Meta and Nvidia's CDS spreads also widened to record levels, though by far smaller margins than Oracle's.
• The report attributed the moves to growing investor concern over when heavy AI investment will turn into returns, and whether debt-heavy companies can grow revenue fast enough to cover rising interest costs — credit stress building across the AI trade, especially among data-center firms reliant on future revenue, with loss-making CoreWeave at the center of the concern.

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