US Tech CDS: Credit has its own story

While equity markets have reacted sharply to growing concerns around AI-related spending, credit markets are telling a more nuanced story. Our latest analysis explores how U.S. technology credit default swaps (CDS) have repriced since mid-September, significantly underperforming the broader market while exhibiting increasing dispersion across issuers.

The widening has been most pronounced among AI infrastructure and semiconductor-linked names, including SpaceX, Nvidia and Broadcom, whose CDS spreads have widened by more than 90%, compared with 23% for Microsoft and 9% for the broader North America BB benchmark. The findings suggest that investors are increasingly differentiating between cash-rich technology companies and firms whose credit profiles are more dependent on sustained AI investment.

As CDS dispersion reaches its highest level of the year, the report highlights how "AI credit" is no longer trading as a single theme. Instead, markets are becoming more selective, pricing issuer-specific risks, funding requirements and contingent exposures with greater scrutiny.