By Matt Wirz

Bond traders are showing signs of indigestion over the tens of billions of dollars they lent this fall to large tech companies, or hyperscalers, to pay for new artificial intelligence infrastructure. Mounting concerns of a potential AI bubble kicked into overdrive after Oracle disclosed earlier this week much higher-than-expected spending on costly chips, networking equipment and other capital expenditures.

Bonds issued by Oracle, Meta and Amazon dominated the corporate debt market this morning with about $1.4 billion of the securities changing hands, according to MarketAxess. The activity accounted for roughly 7% of the corporate bond market's trading volume.

Credit markets have served as a barometer of rising risk in past technology buildout cycles, most notably in the late 1990s and early 2000s when telecommunications companies built out fiber optic and satellite networks, according to research by Bank of America. Selloffs in telecom bonds preceded sharp corrections in stock prices by months, according to the research.

"Today's Hyperscalers, viewed in the same framework, look eerily similar to early-stage Telcos of '98," analysts at the bank wrote in a report Thursday.

Selling pressure is pushing up the yield premium over safer Treasury bonds, or spread, that investors demand to hold the newly issued hyperscaler bonds. The spread on Oracle's 5.95% bond due 2055 jumped 0.20 percentage point to 2.11 percentage points over Treasurys, according to MarketAxess. That is close to double the roughly 1.20 percentage points above Treasurys the bond traded at when Oracle first issued it in September.

Selling hit the debt of "neo-cloud" companies even harder. Neo-clouds, which purchase advanced microchips for installation in data centers and rent them out to AI companies, are especially exposed to market sentiment because they depend heavily on stock and bond investors for cash.

The spread on CoreWeave 9.25% bonds due 2030 that the neo-cloud issued in May jumped half a percentage point today to about 8 percentage points, according to MarketAxess. Its credit default swaps also soared to about 7.90 percentage points.

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December 12, 2025 13:46 ET (18:46 GMT)

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