Cost to insure big tech debt surges as investors question AI returns

Wall Street is buying more insurance against big tech companies failing to pay their debts. It is also paying a lot more for it. In mid-October 2026, the cost of protecting against defaults by big tech and AI-linked borrowers climbed to historic levels. The driver is a simple question with an uncomfortable answer: can the AI industry earn enough to justify what it is spending? CoreWeave leads the way, and not in a good sense The instrument in focus is the credit default swap, or CDS. Think of it as a homeowner’s insurance policy, except the house is a company’s bonds. Buyers pay an annual premium, and if the borrower defaults, the seller covers the loss. The premium is quoted in basis points, where one basis point is a hundredth of a percentage point. When that number climbs, the market believes a default is getting more likely. CoreWeave, the data-center operator, is the starkest example. Its five-year CDS pushed past 1,100 basis points on October 15, 2026. That pricing implies a five-year default risk of roughly 63-64%. A year earlier, the implied figure sat at about 30%. The company carries nearly $50 billion in debt. It has been described as the AI trade’s canary in the coal mi...