Tech companies have issued nearly $500 billion in AI-related debt during 2026. This surge in borrowing, coupled with capital expenditures projected to exceed $1 trillion for 2025 and 2026, has led investors to increase spending on credit default swaps to hedge against potential defaults.
On October 8 and 9, 2026, Broadcom saw its five-year credit default swaps reach a record 136 basis points. Oracle recorded even higher levels, hitting approximately 261 basis points. These figures reflect growing market concerns regarding the ability of these firms to repay debt linked to long-term AI investments.
Current market pricing for five-year credit default swaps indicates a default probability exceeding 20% for Oracle and approximately 16% for SpaceX. Nvidia, another major player in the AI sector, shows an implied default probability of over 7%.
Oracle is reportedly negotiating with Apollo and Goldman Sachs to secure financing for a significant chip acquisition. Analysts suggest that the outcome of these discussions will serve as a key indicator of lender appetite for large-scale, hardware-focused debt deals in the current climate.
