Alphabet Inc.’s debt risk rose as credit default swap costs increased, reflecting investor fears that its massive AI spending may not yield returns. The five-year CDS on Google’s debt rose 5.3 basis points to 84 basis points, the largest increase since September. Weaker-than-expected third-quarter revenue, particularly in ad sales, raised concerns about Alphabet’s ability to finance its AI investments.
Meta Platforms and Broadcom also saw rising CDS costs. Bond investors are focused on when AI spending will translate into free cash flow. Trading volume for CDS on hyperscalers and chipmakers surged to $176 billion this year, with Oracle’s swaps leading at $46.8 billion.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing