Alphabet's Debt Risk Gauge Rises as Earnings Revive Concerns Over AI Borrowing

Alphabet Inc.'s cost of protection against debt default rose as its shares plunged on Thursday. Disappointing earnings from the company have intensified market worries that the huge sums it is borrowing to fund artificial intelligence (AI) spending may fail to pay off. According to ICE Data Services, the price of the company's five-year credit default swaps (CDS) at one point climbed 5.3 basis points to 84 basis points a year, the largest increase since September 21. CDS prices tend to rise as investor concerns grow. CDS on companies including Meta Platforms Inc. and chipmaker Broadcom have also increased. Gavan Nolan, executive director of fixed income pricing at S&P Global Market Intelligence, said that if AI investments pay off, equity investors could reap huge gains, but if the situation deteriorates, bondholders will bear the losses. (Caixin)