Trading in credit default swaps (CDS) linked to major technology companies has surged as investors seek protection against a potential reversal in the AI investment boom, according to a report by the Financial Times.

More than $9bn of CDS tied to debt issued by Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom and Nvidia traded weekly on average in September, up from less than $2bn in July, according to Morgan Stanley Research.

Demand has accelerated alongside a sharp increase in AI-related borrowing, with companies raising an estimated $466bn so far in 2026, compared with $101bn over the same period last year. Concerns over leverage, concentrated exposure and the profitability of AI infrastructure investments have driven up the cost of default protection.

Credit derivatives are also attracting growing interest from multi-asset and equity investors seeking cheaper alternatives to equity put options for hedging technology exposure.

Five-year CDS spreads on Meta and Nvidia reached record highs of 108 and 101 basis points respectively this month, while Oracle's spread climbed to 322 basis points on Monday, more than double its level at the start of the year. SpaceX CDS also reached a record 226 basis points.

The sharpest deterioration has been at AI cloud infrastructure provider CoreWeave, where some bonds have fallen into distressed territory. Five-year CDS spreads have reached approximately 1,090 basis points, with investors required to pay $1.82m upfront to secure $10m of protection, alongside quarterly payments of $125,000.

Robert Dafforn, chief investment officer at distressed debt specialist Polus Capital, warned that high leverage and interconnected financing arrangements across the AI sector could amplify losses if weaker borrowers encounter difficulties.

The widening spreads reflect growing concern over the sustainability of AI-related capital expenditure, with credit derivatives increasingly serving as a barometer of investor sentiment towards the sector.