Investors are increasingly hedging against the credit risks of tech giants. The cost of such protection is hitting multi-year records, and credit markets are diverging further from stock prices amid the AI race. This is a warning sign that cannot be ignored.
Warning signs are coming from several fronts at once. These include the rising cost of default insurance, the divergence between credit and stocks, and the collapse of the most speculative securities.
Rising Cost of Protection Against Big Tech Risks
The first signal was noted by analysts at The Kobeissi Letter. Five-year credit default swap (CDS) spreads for Oracle, Amazon, Google, and Microsoft have risen to around 75 basis points—nearly the highest level in at least the last seven years.
Excluding Oracle, the picture is only slightly milder. As experts noted, spreads for the same group of companies have risen to about 49 basis points—the highest level since at least 2018.
Both indicators, according to researchers, have more than doubled since the start of 2025. They are now notably higher than the peaks of the 2022 bear market.
Analysts attribute this to record borrowing by Big Tech. Amazon, Google, Nvidia, Meta, Oracle, and SpaceX issued a record $182 billion in investment-grade bonds in 2026—a 1300% increase year-over-year.
Credit and Stocks Are Diverging Further
The second signal was spotted by analysts at Global Markets Investor. Credit spreads for the largest data center operators have widened to 153.5 basis points over government bonds, compared to around 118 basis points in February—the highest since the launch of this Goldman Sachs basket.
Meanwhile, the stocks of the same companies have barely risen. As experts note, their basket has gained only about 3% over the same period, highlighting a growing divergence between sentiment in the stock and bond markets.
Demand for the bonds themselves is also weakening. The coverage ratio for issuances, reflecting demand relative to supply, has fallen from about 5 in February to less than 2 in July.
The reason lies in the scale of future spending. As analysts explain, data center operators could spend about $5.5 trillion on AI by 2030, roughly half of which will be financed through the bond market. Thus, any misstep by the Fed on rates leaves the market with no margin of safety.
Speculative AI Stocks Are Crashing
The third signal experts see is the collapse of the most volatile stocks. According to Global Markets Investor, Goldman's basket of high-risk stocks with strong momentum risks falling 23% in a month—the worst performance in 17 years.
The basket includes the market's most "pumped" stocks. As analysts clarify, the biggest contributors to the decline are Nvidia, Super Micro Computer, Palantir, D-Wave Quantum, and Navitas Semiconductor.
These securities, according to the service, are particularly favored by retail investors. Their collapse hits private traders the hardest.
Analysts attribute the sell-off to growing doubts. Investors are increasingly questioning whether data center operators are overbuilding capacity for AI.
All three signals paint a unified picture. Credit markets, which historically sense trouble first, are already pricing in the risks of the AI race, while stocks are still holding up—and if this tension continues to build, those betting on AI through the stock market will eventually feel the repercussions.
My analysis: The divergence between credit markets and stocks is a classic precursor to a correction. Investors who blindly believe in endless AI growth risk falling into a trap when debt burdens become unsustainable. The bond market is already voting with its feet, and sooner or later, stocks will follow.