The spike in Meta's credit risk reflects broader instability in AI-linked financing, with trading volumes for default insurance on major chipmakers and hyperscalers reaching $140 billion through September. AI-related debt issuance rose to an estimated $466 billion in 2026, compared to $101 billion in 2025. Other sector giants have faced similar pressure: Nvidia's 5-year credit default swaps hit a record 101 basis points, and Oracle's climbed to 343 basis points, implying a 24% probability of default.
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Meta Cash Flow Flips Negative as AI Leases Reach $825 Billion
Earnings5 days ago
Meta's shares fell approximately 6% after the company reported free cash flow of negative $2.1 billion for the last quarter, a reversal from the positive $10.6 billion it saw a year earlier. The stock drop and a decline in corporate bonds followed the disclosure of roughly $825 billion in future leases and contracts for AI computing, up from $700 billion in July. These spending plans pushed the cost of insuring Meta's debt against default to a record, with 5-year credit default swaps reaching between 114.5 and 119 basis points.
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