By Sweta Killa
Publication Date: 2026-05-28 10:24:00
Wall Street traders are increasingly hedging exposure to loans from big tech companies as hedging activity related to AI-era borrowing surges, driving outstanding credit default swap (CDS) volumes to record levels.
The total value of these companies’ debt insured against default has increased by 500% since the second quarter of 2025.
Big Tech with the highest CDS risk
The increase in protection comes amid growing concerns about a possible AI bubble. The sector is experiencing significant investment while facing rising costs and inflationary pressures.
Jordi Visser, Head of AI Macro Nexus Research at 22V Research, noted that about 12% to 18% of the planned $8 trillion AI infrastructure buildout has so far been completed, highlighting potential supply chain bottlenecks for key components such as high-bandwidth memory chips and power systems.
Increase in AI borrowing
The letter said: “AI-related corporate borrowing is exploding.”
Disclaimer: This content was partly created with the help of AI tools…
