Goldman, JPMorgan issue margin calls as AI sell-off deepens

Credit default swap spreads tied to some of the world's largest technology companies have surged to multi-year highs, reflecting deepening investor anxiety about the debt being accumulated to fund artificial intelligence infrastructure. The widening spreads, combined with a formal warning from Fitch Ratings and margin calls from major Wall Street banks, have transformed what began as an equity valuation debate into a broader credit market concern.

CDS Spreads Signal Rising Default Risk

The credit insurance market has become a barometer for AI-related financial stress. Oracle's ↘ 2.10% five-year CDS has climbed steadily from roughly 105 basis points late last year to approximately 200 basis points, the highest among major AI-infrastructure players. CoreWeave's ↘ 2.41% five-year CDS has topped 855 basis points, implying roughly a 50% probability of default over five years under standard pricing models. CDS spreads for Nvidia ↘ 5.69%, Meta ↘ 0.40%, Alphabet ↘ 0.79%, Amazon Amazon.com, Inc. ↗ 0.98%, and Broadcom ↗ 2.53% have also reached elevated levels as Bloomberg reported that Wall Street is now actively differentiating between AI winners and losers in the credit market.finance.yahoo+2

Big Tech's credit insurance costs have more than doubled since early 2025, according to Yahoo Finance, as the sector collectively sold roughly $182 billion in investment-grade bonds to fund data center construction.thenextweb+1

Fitch Elevates AI to Systemic Credit Risk

Fitch Ratings, in its Q3 Global Risk Outlook published this week, warned that the AI investment boom has escalated from a tech valuation issue into a vulnerability for the global credit system. "The scale of AI investment is such that the exposure of the economy and overall capital market to such a correction is significant," the agency wrote, adding that the intertwining of capital markets and AI "created a vulnerability for credit."reuters+1

Fitch noted that the S&P 500's cyclically adjusted price-to-earnings ratio is near dot-com-era levels and that capital expenditure at Alphabet, Amazon, Meta, and Microsoft ↘ 2.35% is projected to rise about 75% to some $700 billion a year — a pace now outrunning cash generation. Earlier this month, S&P downgraded Oracle to BBB-, one notch above junk.thenextweb

Margin Calls Hit Hedge Funds

Goldman Sachs The Goldman Sachs Group, Inc. ↘ 0.10% and JPMorgan ↗ 0.06% have begun issuing margin calls to hedge funds with concentrated AI-related holdings, demanding additional collateral as the sharp sell-off in AI stocks exposed leveraged positions built during the first five months of 2026. The moves came after hedge funds had substantially increased leverage during the earlier AI rally, according to Hedgeweek.hedgeweek+1

The convergence of widening credit spreads, a ratings agency warning, and prime brokerage margin calls marks an inflection point — the AI trade, long treated as a purely equity-market phenomenon, is now being stress-tested across the full capital structure.