⚠️Credit markets are flashing warning signs across the AI trade: The cost of insuring CoreWeave's debt against default has spiked to 855 basis points, implying investors see roughly a 50% chance of default within 5 years. Oracle, $ORCL, has seen its 5-year credit default swap (CDS) surging to a record 215 basis points, even above the Great Financial Crisis levels, up from ~145 basis points at the end of last year. SpaceX, $SPCX, has seen its CDS surge more than +50% since the company began trading last month, to ~185 basis points. This comes as Big Tech's AI spending is pushing companies to borrow at an unprecedented pace, with Alphabet, $GOOGL, alone raising ~$60 billion this year through its first-ever yen bond, its biggest euro deal, and its first-ever Canadian dollar bond sale. By comparison, Microsoft, $MSFT, has seen the smallest increase of the group, reflecting its AAA rating and the fact that it has not sold corporate bonds since 2017. Meanwhile, Amazon’s, $AMZN, $25 billion bond sale attracted only slightly more demand than the amount of debt it offered, far below the typical level of around 4x oversubscription. When credit markets flash red, equity investors usually take notice.