financing the artificial intelligence technology craze puts pressure on credit markets

The financial euphoria around artificial intelligence comes up against a physical and monetary limit evident in credit markets. According to CNBC Markets, the yield on CoreWeave's bond for 2032, with a coupon of 9.625%, soared above 16%, reflecting the severe increase in fundraising for technological expansion.

According to CNBC Markets, CoreWeave's five-year credit default swaps peaked above 1,289 basis points on Thursday before retreating to around 1,155 on Friday. This credit stress is not restricted to smaller companies, as the CDS spread in the last thirty days rose 76% for Nvidia, 49% for Broadcom and 44% for Amazon, according to the same data.

The rise in corporate debt has reached colossal levels. According to a survey by CNBC Markets, AI bond issuances accounted for by Goldman Sachs since October 29th total five deals totaling 67 billion dollars, while the total issuance of debt from hyperscalers in 2026 will reach 296 billion dollars, with a projection of jumping to 440 billion next year, in addition to 300 billion at project level.

The fiscal and operational situation of these companies is beginning to raise fundamental concerns. Third-quarter data cited by CNBC Markets shows that hyperscalers collectively recorded negative free cash flow, due to capital expenditures that exceeded operating cash generated.

The risk of financial strangulation summarizes the warning made by Christopher Wood, from Jefferies, cited by CNBC Markets, when pointing out that the inevitable interruption of this investment rush will occur when access to credit is cut off due to lack of financial support. At the same time, projections from Goldman Sachs indicate that moratoriums could impact 45% of the planned capacity of data centers in the US, a movement exemplified by the position of the elected governor of Texas, Gina Hinojosa, in defense of a shutdown until community protections are in place.

In regulatory counterpoint, Kevin Hassett, director of the National Economic Council, told CNBC on Friday his expectation of continued growth in data centers, according to CNBC Markets. The clash between accelerated physical expansion and the growing weight of debt reshapes the macroeconomic scenario for private and corporate capital.

What changes for the investor

The significant increase in the cost of credit and the worsening cash flows of technology giants increase the systemic risk associated with the investment cycle in artificial intelligence. For those who operate and invest in global markets, rigorous monitoring of credit spreads, corporate debt issuances and regulatory pressures on infrastructure becomes a central component in risk analysis, requiring greater caution when faced with sectoral leverage.

Automatically translated from Portuguese.