Wall Street Hedges Against Big Tech as CDS Activity Surges to $12.5B

Wall Street is piling into insurance against the biggest names in tech. Credit default swap activity on major US technology firms has surged 90% since early September 2025, as banks scramble to manage risk from underwriting a record wave of AI-fueled debt.

The catalyst: hyperscalers like Meta, Alphabet, Amazon, Microsoft, and Oracle collectively issued $121 billion in bonds during 2025-more than quadruple the five-year average.

J.P. Morgan launched a dedicated CDS basket covering those five companies to meet demand. Oracle saw its five-year CDS spreads widen from 40 basis points to as high as 160. Its CDS trading volume exceeded $9.2 billion over a ten-week stretch-20 times the prior year.

Hedge funds are taking the other side, selling CDS protection and betting the companies won't default.

Analysts project tech-sector borrowing for AI ventures could reach $1.5 trillion by 2028.