Wall Street has a new favorite insurance policy, and it’s written against the biggest names in tech. Credit default swap activity on major US technology firms has surged 90% since early September 2025, as banks scramble to manage the risk that comes with underwriting an unprecedented wave of AI-fueled debt.

The catalyst: hyperscalers like Meta, Alphabet, Amazon, Microsoft, and Oracle collectively issued $121 billion in bonds during 2025. That figure is more than quadruple the five-year average for tech sector bond issuance.

J.P. Morgan builds the hedging toolkit

To keep up with demand, J.P. Morgan launched a dedicated CDS basket covering Alphabet, Amazon, Meta, Microsoft, and Oracle.

Oracle offers perhaps the most dramatic illustration. Its five-year CDS spreads widened from roughly 40 basis points to between 151 and 160 basis points by late 2025. Oracle’s CDS trading volume exceeded $9.2 billion over just a ten-week stretch in late 2025, soaring more than 20 times compared to the prior year.

Why Big Tech is borrowing like there’s no tomorrow

Meta alone raised $30 billion in bonds during 2025. Alphabet followed with $25 billion.

Analysts project that tech-sector borrowing for AI ventures could reach $1.5 trillion through 2028.

Hedge funds smell opportunity

While banks are buying protection to manage underwriting risk, hedge funds are moving to the other side of the trade. They’re selling CDS protection on these tech names, essentially betting that the companies won’t default and collecting premiums along the way.

Worth noting: none of this activity involves direct exposure to crypto assets or tokens. This is purely a traditional credit markets story.