AI debt boom sends CDS trading surging as Wall Street revisits a familiar hedge

Credit default swaps tied to major AI-linked borrowers have moved back to the center of Wall Street trading, with Morgan Stanley and Goldman Sachs pointing to a sharp jump in volumes and a widening list of actively traded names. Morgan Stanley said average weekly CDS trading in September tied to Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom and Nvidia topped $9 billion, up more than 4.5 times from less than $2 billion in July. Goldman’s FICC data showed AI single-name CDS volumes rose 400% year over year, while the number of liquid names expanded from four to 10 to 12. The move comes alongside a rapid buildout in AI-related debt. Morgan Stanley estimated AI-linked companies have issued about $466 billion of bonds so far in 2026, versus $101 billion in the same period of 2025. As issuance grows, investors are increasingly using single-name CDS rather than equity put options to hedge exposure. CoreWeave has become the market’s main stress point, with its 5-year CDS quoted around 1,090 basis points, according to the Financial Times, and rising as high as 1,117 basis points on Oct. 14. Strategists and analysts cited in the source say the market is now using CDS not only as a hedge, but also as a live signal of financing strain and broader AI trade risk.