Meta Platforms’ cost of insuring its debt against default has climbed to a record high as investors grow increasingly concerned about the financial risks associated with the company’s expanding artificial intelligence investments.
The company’s five-year credit default swaps (CDS), which provide protection against debt default, rose by about 7.6 basis points to a record 114.79 basis points, reflecting growing demand for protection against potential credit risks.
The increase followed Meta’s decision to raise the lower end of its 2026 capital expenditure forecast to $135 billion, up from the previous range starting at $130 billion. The higher spending outlook has intensified questions about how quickly the company’s investment in AI infrastructure will translate into returns.
Meta’s shares fell about 6% to their lowest level in roughly six weeks as investors reassessed the outlook for the technology giant.
The pressure extends beyond Meta. Companies involved in AI infrastructure and data centres have also faced losses as markets question whether the sector’s rapid expansion, increasingly supported by borrowing, can generate sufficient returns.
CoreWeave, an AI cloud infrastructure provider, has lost more than a third of its market value during October, while other companies in the sector have also recorded declines. Credit risk indicators for major technology companies, including Oracle and Amazon, have risen amid concerns over mounting AI-related financing needs.
Credit default swaps do not mean a company is expected to default. However, rising costs indicate that investors are demanding greater compensation to protect against that possibility.
The developments highlight growing scrutiny of the cost, financing and expected returns of the global AI investment boom.
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