Wall Street Hedging Surges To Highs As Nvidia (NASDAQ: NVDA), Oracle (NYSE: ORCL) And Amazon (NASDAQ: AMZN) Pile Billions Into AI - foreignpolicyjournal.com

As the AI era accelerates, Wall Street traders are significantly increasing hedges against credit risk in major tech firms, pushing credit default swap (CDS) volumes to record highs. According to The ... Read original →

Wall Street’s surge in tech CDS exposure signals deep skepticism about the sustainability of AI-driven capex. Oracle’s $6.5B CDS position reveals vulnerability: aggressive infrastructure bets without control over semiconductors or HBM supply chains. Upstream, HBM4 delays and TSMC’s (Taiwan, China) CoWoS packaging monopoly are inflating delivery costs across the board. U.S. CHIPS Act compliance mandates local production, yet geopolitical friction disrupts equipment and material flows. Microsoft and Amazon will likely accelerate in-house AI silicon to reduce reliance; NVIDIA’s GPU premium hinges on sustained ROI from AI data centers—if that falters, pricing power evaporates. Over the next 18 months, power constraints and debt overhang will cull players in the $8T AI buildout, especially those with high leverage and low computational efficiency.