AI Debt Worries Cool for Now, but Earnings Week Brings the Next Big Test

Nerves in credit markets have settled somewhat after a rocky few days. Meta’s credit default swap spreads climbed last week when it posted negative free cash flow, then dropped once it unveiled a $95 billion stock offering on Monday. Nuveen’s Richard Cheng said investors had braced for a large bond sale right after earnings, so the lack of one acted as a direct trigger for tighter spreads. CNBC thinks the credit fears may have been overblown and expects the calmer mood to last through earnings season. Even so, Meta’s swap spread is still up 177% this year and Amazon’s is up 129%.

Alphabet, Amazon and Oracle Earnings Could Move Tech Bonds

Oracle holds its Investor Day on Wednesday, while Alphabet reports Wednesday and Amazon on Thursday after the close. Analysts expect Alphabet to show free cash flow of negative $2.3 billion on $55.2 billion of capital spending, and Amazon negative $9.9 billion on $58.7 billion. Microsoft also reports Wednesday and has not sold bonds to fund its AI plans. Cheng says investors care most about capex guidance. Meeks reads heavy spending as proof of strong AI demand.

Oracle Is the Credit to Watch

Oracle carries $117 billion in long term debt and holds a BBB minus rating, the lowest rung of investment grade. Chalfin calls it the most important investment grade tech credit because it trades more like high yield.

Off Balance Sheet AI Commitments Hide Part of the Picture

S&P Global’s Mark Habib notes that data center leases and chip purchase commitments often are not counted as debt. S&P is working to give the market a clearer view of those obligations. Its August estimate shows hyperscalers with negative free operating cash flow in 2026 and 2027.