The cost of borrowing for artificial intelligence infrastructure provider CoreWeave has risen sharply, with the yield on its 2032 bond climbing above 16 percent. The increase signals heightened investor concern over the credit risk associated with capital-intensive AI expansion.

CoreWeave’s five-year credit default swaps (CDS), a key metric for gauging default risk, spiked above 1,289 basis points on Thursday, surpassing their previous peak in October, according to Deutsche Bank. The measure eased by 8 percent on Friday to approximately 1,155 basis points, but remains elevated compared to broader technology peers.

Widening spreads across AI sector

Rising credit costs are not isolated to CoreWeave. CDS spreads for Nvidia debt have increased 76 percent over the last month, standing at roughly 139 basis points. Broadcom’s CDS rose 49 percent, while Amazon’s gained 44 percent. Oracle’s spread was recorded at about 298 basis points, significantly lower than CoreWeave’s level near 1,100 basis points.

The widening spreads occur as hyperscalers and AI-focused firms continue to issue substantial debt to fund data center construction and hardware acquisition. Goldman Sachs reported that five AI bond deals totaling $67 billion have been completed since October 29, pushing total hyperscaler debt issuance for the year to $296 billion.

Cash flow and regulatory headwinds

Goldman analysts noted that hyperscalers collectively reported negative free cash flow in the third quarter, as capital spending outpaced operating cash flow. The bank forecasts $440 billion in hyperscaler debt issuance next year, plus an additional $300 billion in project-level issuance across investment-grade and high-yield markets.

Bank of America analysts estimate that AI-related credit issuance will rise 31 percent from 2026 to 2027, reaching $685 billion, before declining 23 percent to $531 billion in 2028.

Regulatory uncertainty may also impact future capacity. Goldman Sachs estimates that moratoriums could affect 45 percent of planned data center capacity in the United States, with a significant portion located in Texas. Texas governor-elect Gina Hinojosa has stated she supports a moratorium until the state legislature enacts protections for communities, though she is not opposed to data centers generally.

Despite political shifts, National Economic Council Director Kevin Hassett told CNBC that he expects data center growth to continue as forecast, regardless of recent election results.