AI Funding Risks Rise as Oracle, CoreWeave Credit Spreads Widen

Jefferies has warned that widening credit spreads at Oracle and CoreWeave signal growing financing risks for the global artificial intelligence infrastructure boom, Economic Times Markets reported on October 17. Both companies’ five-year credit default swap spreads reached their highest levels since the AI capital-expenditure cycle began in early 2023, according to the research.

Christopher Wood’s GREED & fear report, titled “K-shaped stresses, AI tremors and the Houthis”, urged investors to watch credit markets for signs that lenders and investors may become less willing to finance continued AI expansion. The warning concerns pressure on funding conditions—not a finding that financing for AI projects has stopped.

Oracle and CoreWeave credit risk indicators climb

Oracle’s five-year credit default swap, or CDS, spread rose from 186 basis points on September 11 to 288 basis points at the report’s latest reading. CoreWeave’s spread increased from 749 basis points to 1,118 basis points over the same period, Jefferies said.

CDS contracts provide protection against a borrower’s default; a wider spread means that protection costs more. These spreads are indicators of perceived credit risk, rather than the interest rate a company pays on every loan or bond.

The report also put the yield on CoreWeave’s bond due in 2032 at 14.8%. That market yield points to expensive debt financing conditions, although it is not the same as the bond’s contractual coupon.

Building data centres and adding computing capacity require substantial upfront spending. Higher borrowing costs can make those investments harder to finance, particularly for companies that depend on external capital. Jefferies identified the credit-market moves as an early warning to monitor, rather than evidence that projects have lost access to funding.

Slower earnings growth adds to the funding challenge

Jefferies also cited its October 13 research report, “Diversifying Beyond AI”, which said consensus earnings growth for global AI stocks was expected to moderate from around 100% in 2026 to 30% in 2027 and 22% in 2028. These are forecasts, not reported earnings outcomes.

Global AI stocks traded at 23 times forward earnings, against 13 times for non-AI stocks, according to the research. That valuation premium, alongside expectations of slower profit growth and more costly financing, raises the pressure on companies to demonstrate that their infrastructure spending can deliver returns.