01 OCTOBER 2026
Oracle has emerged as an unlikely bellwether for the AI cycle.
The company is borrowing heavily to build large data centres, making it one of the main beneficiaries of continued capex, but also leaving it more exposed to any signs of balance sheet stress.
A Credit Default Swap (CDS) is essentially an insurance contract against a company defaulting on its debt. When CDS spreads rise, investors are demanding greater compensation for perceived credit risk (and vice versa).
That is what makes this chart one to watch.
Oracle’s 3-year CDS spread has risen from around 20 basis points in early 2025 to more than 140 basis points today, despite continued optimism surrounding AI demand.
The message is that the AI boom is not necessarily ending, but credit markets are becoming more focused on how the capex is being financed.
This means the cycle is likely entering a more discerning phase.
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