Nvidia Corp.’s (NASDAQ:NVDA) credit default swaps posted their biggest one-day jump on record Monday, a sign the debt market may be losing faith in the AI trade faster than the stock market is.
The five-year swaps, which price the cost of insuring Nvidia’s debt against default, jumped roughly 14 basis points to around 82 basis points, according to ICE Data Services. The contracts only began actively trading in November.
The move shows “the credit market noticing something the equity market hasn’t fully priced,” Pepperstone research strategist Dilin Wu told Bloomberg.
The stock fell 4.99% to $196.51 Monday, shedding roughly $250 billion in market value, once again ceding the title of world’s most valuable company to Apple Inc. (NASDAQ:AAPL).
The Deals Behind The Repricing
Nvidia is reportedly in early talks to guarantee roughly $250 billion in financing for OpenAI’s planned 10-gigawatt data center in Ohio, with up to $350 billion in chip financing also under discussion.
OpenAI is a private company without an investment-grade credit rating, according to the Wall Street Journal, so lenders want Nvidia’s balance sheet behind the $500 billion project before they put up the money.
The WSJ’s report landed just days after Nvidia unveiled a separate $500 billion-plus partnership with SK Group, parent of SK Hynix Inc. (NASDAQ:SKHY), covering AI factories and next-generation memory.
The scale is what may have spooked credit desks. Nvidia’s latest 10-Q discloses just $3.5 billion in maximum exposure across all its facility lease guarantees, meaning the reported OpenAI backstop would run roughly 71 times its current guarantee book.
“Around and around we go,” investor Michael Burry wrote on X, as Wall Street is split over whether the AI boom’s interlocking deals represent a virtuous circle or something closer to a Ponzi scheme.
Capex Panic Was Already Building
Alphabet’s (NASDAQ:GOOGL) free cash flow swung to negative $5.9 billion last week, its first quarterly outflow since 2004, after the company raised 2026 capex guidance to as much as $205 billion.
“Big Short” investor Steve Eisman said the market is beginning to lose patience with runaway AI spending, a nervousness now spilling from equities into credit.
The selloff spread globally Tuesday.
A Bloomberg gauge of Asian chip shares slumped 7.5% in its biggest drop since April 2025, South Korea’s Kospi sank as much as 11%, and SK Hynix fell more than 14% in Seoul, days after its blockbuster Nvidia deal.
What Prediction Markets Are Pricing
Traders on Polymarket currently assign roughly an 18% chance the AI bubble bursts by the end of 2026, a number that has ticked slightly higher over the last few days.
A separate market on the world’s largest company at the end of the year shows NVDA as the favorite at 49%, with Apple in second with 36%, suggesting traders expect Nvidia to reclaim the crown despite Monday’s slide.
All eyes now turn to earnings from Meta and Amazon later this week, where capex guidance may determine whether the selloff deepens or fades.
Image: Shutterstock
Login to comment