AI-Linked Single-Company CDS Trading Rises 400% in One Year

The market for credit default swaps (CDS) on individual AI-related companies is expanding, with trading up 400% year over year as rising bond issuance puts borrower-specific debt risk in focus.

Contracts on 10 to 12 AI-related companies now trade with meaningful liquidity, up from four previously. Notional CDS trading volume per company has climbed from $50 million to $100 million a week in 2025 to hundreds of millions of dollars a day.

A CDS contract lets traders take a position on a borrower's credit risk. Participants use single-company contracts to hedge exposures, express a view on a borrower's finances or trade price differences between CDS and bonds. The increase in trading volume does not, by itself, measure how much new default protection investors have bought.

AI-related companies have issued about $466 billion in bonds so far in 2026, compared with $101 billion during the same period in 2025. Across seven AI-related companies — Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom and Nvidia — average weekly CDS trading exceeded $9 billion in September 2026, up from less than $2 billion in July 2026.

The cost of protection has also risen for several companies. Oracle's five-year CDS spread climbed from 144 basis points at the start of 2026 to 322 basis points, while SpaceX's rose from 110 basis points at the end of June to 226 basis points. Meta's five-year spread reached 108 basis points in October.

CoreWeave's five-year CDS spread closed at 1,117 basis points on Oct. 14 after crossing 1,000 basis points earlier that day. CDS trading tied to chipmakers including Nvidia, AMD and Broadcom has also increased about tenfold as those companies extend financing or guarantees to buyers.

Contracts on individual AI companies can move as much as 30 basis points in a day. That potential for company-specific moves helps explain the appeal of contracts tied to a particular borrower when investors' exposures do not closely match a broad credit index. Demand has extended to CDS on financial and insurance companies amid concern about their exposure to AI investments.

Large cloud providers are projected to issue about $420 billion in direct debt in 2027, alongside roughly $300 billion in project financing.