AI Giants Face Widening Credit-Default Swap Spreads
Major AI companies including Nvidia and Oracle face widening credit-default swap spreads as markets worry about surging capital expenditures and credit risk.
Credit-default swap (CDS) spreads have widened for several leading AI firms, including Nvidia Inc., Broadcom Inc., Oracle, AMD, and Meta Platforms. This trend indicates growing market concern over credit risk, driven by the massive capital expenditures required by hyperscalers and the resulting pressure on free cash flow.
While semiconductor and cloud firms experienced P/E ratio contractions and rising CDS spreads, their stock performances diverged. Oracle saw its stock plunge more than 40% and Broadcom's shares dropped approximately 25% since June 2, 2026. Broadcom's decline coincided with a tripling of its CDS spreads.
Nvidia shares remained resilient during this period. Although the company faced the same widening credit spreads and P/E contraction as its peers, a more than 30% increase in its forward earnings estimates offset these negative factors. Broadcom and Oracle also saw earnings estimates rise, but the gains were insufficient to counteract their sharper multiple contractions.
