As of October 2026, investors are increasingly utilizing credit default swaps (CDS) to hedge against the rising debt levels of major technology companies. This shift reflects market concerns regarding whether future AI-related revenue will be sufficient to cover the significant capital expenditures currently being incurred.
Trading volumes for CDS instruments saw a notable increase in October 2026, with record-high spreads observed for companies such as Oracle, SoftBank, Meta, Nvidia, and CoreWeave. Five-year CDS spreads for Oracle have surpassed 288 to 322 basis points, while Meta and Nvidia have seen their spreads exceed 100 basis points.
CoreWeave faces particular scrutiny, with its bonds trading as low as 77 cents on the dollar and CDS pricing indicating a greater than 60% probability of default within five years. The company holds tens of billions in liabilities related to data center infrastructure.
By mid-October 2026, hyperscalers had issued approximately $466 billion in debt to fund AI infrastructure. Projected capital expenditures for these companies in 2026 are expected to exceed $690 billion, significantly impacting their operating cash flow.
Moody’s estimates that five hyperscalers have $662 billion in lease obligations not yet recorded on their balance sheets. Broader market analysis suggests that total off-balance-sheet liabilities could potentially exceed $1.6 trillion, prompting increased scrutiny from agencies like Moody’s and S&P Global.
