Meta's credit risk indicator hits record high on increased AI spending plan

Oct 22 — The cost of insuring Meta Platforms' debt against default touched an ​all-time high on Thursday, as investors grappled with concerns about its plan to spend more on its AI ‌build-out.

Meta raised the lower end of its annual forecast for capital expenditure to ⁠between $135 billion and $145 billion this ​year, up from $130 billion to $145 ⁠billion expected previously.

As a result, five-year credit default swaps widened ‌7.6 basis points ‌to a record high of 114.79 bps and were set ⁠for its biggest one-day jump ⁠since at least 2025, Markit data showed. Its shares were last down 6% at $655.5, hitting their lowest in about six weeks.

Investors are growing more cautious about debt-fueled AI spending in the face of rising borrowing costs, with neocloud firm ‌CoreWeave at the center of a ​storm that has erased more than 34% of its market value this month.

CoreWeave shares slumped 8.3% on Thursday, while rival Nebius Group and data center operators IREN and Applied Digital also saw heavy losses.

US chip stocks, widely viewed as one of the biggest winners of the AI boom, also ​sold off heavily with the Philadelphia Semiconductor Index set to erase ‌more than $744 billion ‌in market ⁠value on Thursday alone.

Five-year credit default swaps of hyperscaler Oracle also stood close to a record high, while that of Amazon.com held near its highest level since March 2020, according to ‌S&P Global Market Intelligence ​data.

Oracle and Alphabet shares dropped more ‌than 2%, while Microsoft ⁠slipped 1.5% ​and Amazon fell 4.1%.

(Reporting by Shashwat Chauhan in Bengaluru; Editing by ​Arun Koyyur)

Related topics