AI stocks tried to stabilize Monday, but the bears showed up again Tuesday. Advanced Micro Devices $AMD ( ▲ 3.93% ) and Nvidia $NVDA ( ▲ 1.37% ) are sliding after reports that Alphabet $GOOGL ( ▼ 1.08% ) and Meta $META ( ▼ 0.41% ) are exploring a chip partnership that could threaten OpenAI and the companies tied to it.
But beneath the equity moves, the bond market is flashing an even louder warning. The cost of insuring Oracle’s $ORCL ( ▲ 4.03% ) debt has surged over the past several weeks, turning its credit default swaps into one of the clearest ways to track anxiety around the AI data center boom.
Investors have become increasingly uneasy about the borrowing required to fuel Oracle’s massive infrastructure build-out. CDS prices dipped slightly today, but the broader trend is unmistakable: insurance costs have exploded since September, signaling real concern about cash burn.
And those worries are spreading. Even financially stronger hyperscalers like Microsoft $MSFT ( ▲ 1.78% ) , Meta $META ( ▼ 0.41% ) , and Amazon $AMZN ( ▼ 0.17% ) have seen their CDS inch higher as they load up on debt and commit to years of capital spending for AI infrastructure.
Oracle remains in a different category. Wall Street’s cash flow expectations flipped completely, shifting from projecting $25 billion in free cash flow in 2028 to expecting a $25 billion burn in that same year. That reversal helps explain why Oracle’s CDS have rocketed higher and why the stock has slumped.
AI spending used to lift every stock tied to the theme. Now the market looks like it is entering a phase where valuation questions and debt math actually matter. Not full-blown skepticism, but definitely a dose of realism.