Rising borrowing costs signal funding risks for global AI expansion

Financial markets are showing increasing stress in funding the global AI investment boom, with credit risk indicators rising sharply for companies like Oracle and CoreWeave, according to a Jefferies research report. The report warns that higher borrowing costs could challenge the massive investments required for AI infrastructure expansion. Oracle's five-year credit default swap spread rose from 186 to 288 basis points between September 11 and October 17, while CoreWeave's surged from 749 to 1,118 basis points, the highest levels since the AI capex cycle began in early 2023. CoreWeave's 2032 bond yield reached 14.8 percent, indicating elevated financing costs. The report also notes consensus earnings growth for global AI stocks is expected to moderate from 100 percent in 2026 to 30 percent in 2027 and 22 percent in 2028. AI stocks trade at 23 times forward earnings versus 13 times for non-AI stocks, suggesting pressure on companies to justify spending.