Credit default swap trading tied to major artificial intelligence companies has surged as debt issuance accelerates, pushing the cost of insuring some of the sector’s largest borrowers to record levels. Weekly average CDS volumes for contracts referencing Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom and Nvidia exceeded $9 billion in September, up from less than $2 billion in July, according to Morgan Stanley data cited in the report.
The move places credit markets under a sharper spotlight as companies building data centers, purchasing advanced chips and financing AI infrastructure add debt at a much faster pace. CDS contracts allow market participants to buy protection against a borrower defaulting on its debt, making them a closely watched gauge of perceived credit risk.
Morgan Stanley estimated that AI-related companies had issued about $466 billion in bonds year to date in 2026, compared with $101 billion during the equivalent period in 2025. The increase in borrowing has created more debt to hedge, while the complexity of AI financing arrangements has also drawn more attention to the links between chip suppliers, cloud operators, infrastructure providers and their lenders.
Protection costs rise across major AI borrowers
Several large technology companies saw their five-year CDS spreads reach record highs this month, according to the supplied market data. Meta’s five-year protection cost reached 108 basis points, while Nvidia traded at 101 basis points. Alphabet and Amazon also hit record levels.
A basis point equals one-hundredth of a percentage point. In CDS markets, a higher spread generally means buyers of protection must pay more each year to insure against a credit event, reflecting a higher market price for default risk or uncertainty around the issuer’s future leverage.
Oracle and SpaceX recorded some of the largest moves. Oracle’s CDS spread rose from 144 basis points at the beginning of the year to 322 basis points. SpaceX moved from 110 basis points at the end of June to 226 basis points, also a record level in the data cited.
Those moves do not establish that a default is expected. Large, liquid CDS contracts can react to debt issuance plans, capital-spending commitments, shifts in bond-market liquidity and demand for hedges. Yet the widening spreads show that credit-market participants are charging more to protect against a deterioration in corporate balance sheets.
Single-name hedges replace broad index protection
Goldman Sachs FICC data showed AI single-name CDS trading volume increased 400% year on year. The number of AI-linked borrowers considered liquid enough for regular CDS trading expanded from four to roughly 10 to 12, according to the data.
Avishek Biswas, a credit strategist at Goldman Sachs, said weekly notional trading per name had moved from roughly $50 million to $100 million last year to hundreds of millions of dollars per day. That shift indicates traders are increasingly targeting individual companies rather than relying solely on broad investment-grade credit indexes.
Goldman sales data showed the CDX IG index, a benchmark for North American investment-grade corporate credit, widened by 4.4 basis points to 62.5 basis points last week. During the same period, core AI-linked single-name CDS contracts reportedly moved by as much as 30 basis points in one day.
The difference illustrates how AI credit risk is becoming more company-specific. Broad indexes can hedge a general rise in corporate borrowing costs, but they are less precise for traders concerned about a particular company’s capital expenditures, customer concentration or financing commitments.
Chipmakers drew heavier CDS activity after market participants began assessing some vendor-financing and guarantee arrangements as credit exposure. Goldman credit sales strategy data cited a roughly tenfold increase in CDS trading linked to Nvidia, AMD and Broadcom after those structures received greater attention.
Such arrangements can blur the traditional line between equipment supplier and borrower. If a chipmaker provides financing support or guarantees connected to a customer’s infrastructure buildout, its own credit profile may become more sensitive to the customer’s ability to fund and operate the project.
CoreWeave remains the most expensive name to insure
CoreWeave stood out as the riskiest credit among the companies discussed. Its five-year CDS was quoted near 1,090 basis points, according to the report. The quoted terms suggested that buying $10 million of protection required an upfront payment of about $1.82 million, followed by quarterly payments of $125,000. That would place the first-year cost at about 23% of the protected notional amount.
On Oct. 14, CoreWeave CDS traded through 1,000 basis points intraday, reaching 1,050 basis points before closing at 1,117 basis points. The report said that level implied an approximate 63% probability of default over five years.
Gavan Nolan, a credit analyst at S&P Global, said CDS spreads above 1,000 basis points are often driven less by conventional spread analysis and more by assumptions about recovery values if a restructuring or default occurs. In practical terms, markets at those levels are focused heavily on how much creditors might recover rather than merely the annual chance of missed payments.
The pressure on AI infrastructure companies also appeared in equity markets. South Korean data-center operator Elice fell 32% within seconds of its listing in the country’s largest IPO, according to the supplied report. The episode added to concerns that public-market appetite for companies tied to expensive computing infrastructure may be more selective than enthusiasm around AI demand alone would suggest.
Financial firms are also becoming part of the hedge trade
Demand for CDS has extended beyond direct AI borrowers into financial and insurance companies with exposure to related debt, according to a Goldman cross-asset credit note. The trend reflects concern that a pullback in AI-linked credit could reach institutions financing data centers, providing guarantees or holding bonds issued by companies supporting the buildout.
Goldman forecast that hyperscalers could issue $420 billion of direct debt in 2027, alongside roughly $300 billion of project financing. Special-purpose vehicles, lease guarantees and vendor-financing structures could create additional hedging needs as new debt is issued.
Societe Generale data cited in the report showed five-year CDS spreads for hyperscalers had more than doubled since early 2025. Forward price-to-earnings multiples were described as falling over the same period, narrowing the gap between equity valuations and credit-market caution.
Crypto markets face a correlation risk, not a direct credit link
The rise in AI credit hedging does not create a direct default risk for Bitcoin or other decentralized assets. It could nevertheless matter for crypto traders if a sustained repricing of technology credit triggers a broader reduction in risk appetite across equities, credit and highly liquid digital assets.
The supplied article cited a 30-day correlation of 0.74 earlier this year between Bitcoin and major stock indexes. Correlations can change quickly and do not guarantee that a decline in technology credit will produce matching moves in crypto. They do show that Bitcoin has at times traded alongside major risk assets during periods of macroeconomic stress or shifting expectations for technology spending.
AI-linked tokens could be particularly sensitive to a reassessment of infrastructure spending, since their market narratives often depend on demand for computing capacity, decentralized data services or machine-learning applications. Credit spreads now provide another market signal to watch alongside bond issuance, earnings guidance and spending plans from hyperscalers.
Explore how AI-driven markets shape crypto and CDS risks with our in-depth guide on TradFi and AI copy trading.
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