Wall Street Bets Big on Tech Debt as AI Borrowing Explodes

Major technology firms are on a borrowing spree, and Wall Street is taking notice. Credit default swap (CDS) trading volumes linked to key US tech companies have surged 90% since September 2025, signaling growing concern over the massive debt pile.

These firms raised over $121 billion in new debt this year-four times the five-year average. Meta led with $30 billion, followed by Alphabet at $25 billion and Oracle with an $18 billion bond sale. Analysts at Morgan Stanley and JPMorgan project AI-related debt issuance could hit $1.5 trillion by 2028, with $900 billion possibly coming in 2026 alone.

CDS contracts, which act as insurance against default, have become newly active for issuers like Meta. Hedge funds, including Saba Capital, are selling protection on tech CDS, betting against default even as Oracle struggles to syndicate large loans for its $300 billion computing deal with OpenAI.

For investors, the flood of new debt could pressure credit spreads. The concentration risk is clear: the same companies driving AI are also dominating corporate borrowing.