The price tag for protecting yourself against an AI hyperscaler going belly up has never been higher. Credit default swaps on the debt of the biggest AI infrastructure spenders surged to record levels in late July 2026, a clear signal that the bond market is getting genuinely worried about the sustainability of the industry’s capital expenditure frenzy.
Oracle’s five-year CDS spread touched roughly 212 basis points, meaning it now costs $212,000 per year to insure $10 million of the company’s debt against default. For context, Oracle is one of five hyperscalers, alongside Alphabet, Amazon, Meta, and Microsoft, that have been borrowing at a pace that makes even seasoned credit investors uncomfortable.
The numbers behind the nervousness
The spending trajectory tells the story. From 2020 through 2024, these five companies issued an average of around $28 billion in US corporate bonds annually. In 2025, that figure exploded to $121 billion. Goldman Sachs projects cumulative capital expenditure across the group will reach $1.15 trillion through 2027.
Making matters worse, Alphabet reported its first quarter of negative free cash flow since its IPO in 2004 during Q1 2026. The culprit was unsurprising: AI spending.
