Credit stress in AI trade deepens as Oracle, CoreWeave CDS spreads hit record levels

The cost of insuring against U.S. tech defaults has climbed to record levels, signaling growing credit stress in the AI trade as investors question whether massive investments will generate returns quickly enough to service rising debt costs.

Five-year credit default swap spreads for Oracle (ORCL) widened 26 basis points overnight to a record 288 bps, Reuters reported, citing data from S&P Global Market Intelligence. Five-year spreads for SoftBank’s (SFTBY) rose 24 bps to 424 bps. Spreads for data-center operator CoreWeave (CRWV) surged above 1,000 bps, according to LSEG data.

CoreWeave, which is loss-making and owes nearly $50B, has also seen its debt prices slide, with bonds due in 2032 trading at 77 cents on the dollar. Its shares fell 15.46% on Wednesday and another 6% in Thursday’s premarket trade.

Credit default swap spreads for Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), and Nvidia (NVDA) also reached record wide levels, although they remained well below Oracle’s levels, according to LSEG and S&P Global Market Intelligence data.