Tech Giants' Record AI Capex Strains Credit Markets; Alphabet Raises Outlook This Week

According to market observers, record capital expenditure on AI infrastructure by Alphabet, Amazon, Meta, and other cloud giants is raising credit concerns this week. Corporate bond credit spreads have widened notably, and credit default swap premiums are rising across the sector, signaling debt investors are demanding higher risk compensation from once-deemed ultra-safe issuers.

Alphabet upwardly revised its full-year capex guidance this week, triggering a jump in its corporate bond yields. Mizuho Securities warned that tech giants' capex plans are approaching investor tolerance limits, with cloud providers expected to spend more than their combined free cash flow for the first time next year. Oracle's five-year CDS spreads have surged, reflecting broader investor anxiety about AI profitability. Standard & Poor's downgraded Oracle to BBB- this month, one notch above junk status. Meanwhile, Meta is securing financing for its $12 billion Texas data center project, with loan pricing expected higher than previous similar deals.