Oracle, Nvidia, Alphabet, SpaceX CDS Hit Records on AI Debt

Credit default swap prices on Oracle, Nvidia, Alphabet and SpaceX have all pushed to record levels this month, according to LSEG data cited by the Financial Times. That is a signal that bond investors are pricing real anxiety into the AI capex build-out, not just cheering the equity story.

Oracle is the loudest reading. Its five-year CDS climbed to 2.03 percentage points, the highest level since the 2008 financial crisis, up from 144 basis points at the start of the year, Bloomberg reported. S&P recently cut Oracle to BBB-, one notch above junk, after the company posted a negative free cash flow of $23.7 billion for fiscal 2026 against total debt of roughly $130 billion. Nvidia's CDS hit a record around 79 basis points, and Alphabet's also set a record after free cash flow to the firm turned negative for the first time since its listing, in the second quarter.

The concentration in Oracle is not random. It is the largest issuer in Bloomberg's U.S. high-grade corporate bond index outside the financial sector, which makes its swaps the closest thing to a traded proxy for the question of whether AI infrastructure debt gets paid back. The total net notional of CDS outstanding on major tech names has jumped to a record $12.5 billion, up around 500% since Q2 2025, with Oracle alone accounting for $6.5 billion and Amazon and Alphabet at about $2 billion each.

The backdrop is the issuance wave. Big Tech has sold a record $182 billion of investment-grade bonds so far in 2026, and aggregate capex across Alphabet, Amazon, Meta, Microsoft and Oracle is expected to exceed $690 billion this fiscal year, more than 80% year-on-year, with free cash flow for most of the group expected to approach zero or turn negative as AI costs are front-loaded. SpaceX's 30-year spread has pushed past 2 percentage points as investors reportedly shun long-dated notes and crowd into shorter tenors.

The honest caveat is that these spreads are still tight in absolute terms; this is investment-grade credit reacting, not distress, and the reporting rests on LSEG snapshots that move day to day. What the reporting does not resolve is whether the record CDS notional is directional bearish positioning or mechanical dealer hedging against the flood of new paper. Either way, the group most exposed if this keeps widening is the second tier of AI-adjacent issuers, where the equity story and the coupon story have already started to diverge.