Big 5 AI ‘hyperscalers’ have quadrupled their use of debt to fund operations, Bank of America says
Amazon, Google, Meta, Microsoft, and Oracle are increasingly funding their operations through debt, according to Bank of America analyst Yuri Seliger. This year, these five “hyperscalers” have issued $121 billion in debt, including $27 billion alone to fund Meta’s new data center in Richland Parish, La., Seliger said in a research note dated Nov. 17. Amazon also issued $15 billion in new debt on Nov. 17.Recommended VideoTo put that $121 billion in perspective, it’s more than four times the average level of debt ($28 billion) issued by these companies annually over the previous five years, per this Bank of America chart:The sudden influx of these investment-grade (IG) corporate bonds into the market has increased their “spread,” Seliger said in the note: the gap between the interest yield on bonds from these companies, compared with a risk-free rate or the market as a whole. The yield on Oracle’s debt has increased by 48 basis points (0.48%) since September, the note said.“Not surprisingly, this deluge of supply has widened hyperscaler spreads materially. From Sep 1st to Nov 14th, spreads are +48bps wider for ORCL, +15bps wider for META, and +10bps wider for GOOGL. That’s 27%-49% wider, significantly underperforming the overall IG index,” he wrote.Seliger told clients he expects to see a further $100 billion in debt offered to the market next year.All five companies generate more than enough cash flow to cover their operations. However, the arrival of debt vehicles to fund AI development has complicated the investment case for tech stocks, Morgan Stanley Wealth Management chief investment officer Lisa Shalett toldFortunerecently. “What was a very simple story is suddenly getting a lot more complex,” she said. Join us at the Fortune Workplace Innovation SummitMay 19–20, 2026, in Atlanta. The next era of workplace innovation is here—and the old playbook is being rewritten. At this exclusive, high-energy event, the world’s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. Register now.
OpenAI’s partners are carrying $96 billion in debt, highlighting growing risks around the loss-making AI company
Companies supplying data centers, chips, and “compute” processing power to OpenAI have taken on about $96 billion in debt to fund their operations, according to an analysis by the Financial Times. The news highlights the AI sector’s increasing reliance on debt and its growing dependence on loss-making AI startup OpenAI in particular.Currently, the revenues being generated by AI companies and many of the data center operators that are rapidly expanding in order to serve them, are nowhere near big enough to cover their build-out costs. OpenAI has made $1.4 trillion in commitments to procure the energy and computing power it needs to fuel its operations in the future. But it has previously disclosed that it expects to make only $20 billion in revenues this year. And a recent analysis by HSBC concluded that even if the company is making more than $200 billion by 2030, it will still need to find a further $207 billion in funding to stay in business.Recommended VideoHere’s the FT’s breakdown of the debt that OpenAI’s partners have taken on:$30 billion already borrowed by SoftBank, Oracle, and CoreWeave.$28 billion in loans taken by Blue Owl Capital and Crusoe.$38 billion on the table in further talks with Oracle and Vantage and their banks.$96 billion in total debt.The increased use of debt to fund AI is a relatively new development—prior to this year most AI build-out was funded by cash straight from the balance sheets of big tech companies, such as Microsoft, Alphabet, Amazon, and Meta.How CoreWeave services its debt will be of particular interest to investors. The company reported $3.7 billion in current debt, $10.3 billion in non-current debt, and $39.1 billion in future lease agreements for data centers, in its Q3 earnings report. The company said it expected to make only $5 billion in revenue this year but that it had $56 billion in “revenue backlog” coming down the line.All the companies were contacted for comment. CoreWeave and Oracle declined comment when reached byFortune.Separately, the big five hyperscalers—Amazon, Google, Meta, Microsoft, and Oracle—have taken on $121 billion in new debt this year to fund AI operations, according to Bank of America. That’s more than four times the average level of debt ($28 billion) issued by these companies over the previous five years.All that extra investment-grade (IG) corporate debt is having a material effect on the credit markets, a recent research note from BofA analysts Yuri Seliger and Sohyun Marie Lee said.“This week (the week prior to Thanksgiving) is typically the last week of the year with heavy IG supply. And 2025 supply is ending the year with a bang. We are tracking about $50bn for this week and about $220bn over the prior four weeks – about 70% higher than the typical volume for this time of year,” they said.“This year … hyperscalers added another $63bn. This suggests the entire increase in supply this year is explained by [debt-funded M&A deals] and hyperscaler activity.”The increased supply of debt from tech companies is moving “spreads”—the extra interest yield demanded by buyers of debt above the notional risk-free rate—in the credit default swap (CDS) market, according to Deutsche Bank. CDS act as a kind of insurance policy on corporate debt, paying the holders in the event the creditor defaults. If the yields on CDS increase, it signals that the market believes the likelihood of default has also gone up.“The moves have been notable: Oracle’s 5yr CDS has widened by about +60bps to 104bps since late September and CoreWeave by roughly +280bps to around 640bps since September,” Deutsche’s Jim Reid said in a recent note.“It’s hard to know yet whether this shift will have meaningful long-term implications, but the last few weeks clearly mark a new phase of the AI boom—one in which investors are increasingly looking to hedge their risk, and one where public credit markets are being called upon to fund growing capex needs. It’s not just the hyperscalers’ free cash flow anymore,” he said.Join us at the Fortune Workplace Innovation SummitMay 19–20, 2026, in Atlanta. The next era of workplace innovation is here—and the old playbook is being rewritten. At this exclusive, high-energy event, the world’s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. Register now.
Berkshire Hathaway’s longtime CFO to retire as Warren Buffett hands the reins to Greg Abel
As legendary investor Warren Buffett prepares to step down as CEO of Berkshire Hathaway at the end of the year, more leadership changes are taking place—Marc D. Hamburg, the longtime SVP and CFO, is preparing to retire.Hamburg, who joined Berkshire in 1987, will retire on June 1, 2027, after 40 years of service, the firm announced on Monday. Charles C. Chang will succeed him as SVP and CFO, effective June 1, 2026. Chang is currently SVP, CFO, and director of Berkshire Hathaway Energy. In his new role, he will be based in Omaha and will work with Hamburg during a transition period.“Marc has been indispensable to Berkshire and to me,” Buffett said in a statement regarding Hamburg’s retirement. “His integrity and judgment are priceless. He has done more for this company than many of our shareholders will ever know. His impact has been extraordinary.”Recommended VideoChang, 56, joined Berkshire Hathaway Energy in October 2024. Before that, he was a partner in PricewaterhouseCoopers LLP’s energy practice, working with large multinational energy companies. He has 34 years of experience in accounting, U.S. Securities and Exchange Commission reporting, mergers and acquisitions, and sustainability.Berkshire (No. 6 on the Fortune 500) announced in May 2025 that Buffett will be succeeded by Greg Abel as CEO, who has been vice chairman of Berkshire’s non-insurance operations. Buffett will remain with the company as chairman of the board after the transition.Abel joined Buffett’s ecosystem a quarter-century ago when Berkshire entered the energy field. As CEO of Berkshire Hathaway Energy starting in 2008, it grew significantly to include a vast portfolio of utilities, pipelines, natural gas plants, and wind/solar farms,Fortunereported. Since 2018, Abel has been serving as vice-chairman of non-Insurance operations at Berkshire. After a little over a year working as CFO of Berkshire Hathaway Energy, Chang will now join Abel as his strategic partner in leading the entire firm.Other leadership announcements on Monday include, in insurance operations, that Nancy L. Pierce has been promoted from COO to CEO of GEICO, effective immediately. Pierce joined the company in 1986 and has held leadership roles across claims, underwriting, product management, and regional operations. As part of this transition, Todd A. Combs will conclude his tenure at Berkshire and join JPMorgan Chase, where he has served as a director on its board since 2016. Meanwhile, Adam Johnson, currently CEO of the Berkshire unit NetJets , was appointed president of the Berkshire’s consumer products, service and retailing businesses.And Michael J. O’Sullivan has been appointed SVP and general counsel, effective Jan. 1. O’Sullivan joins Berkshire from Snap Inc., where he has served as general counsel since 2017. His appointment marks the creation of a new position at Berkshire, which has for decades primarily used external legal counsel for corporate matters.Join us at the Fortune Workplace Innovation SummitMay 19–20, 2026, in Atlanta. The next era of workplace innovation is here—and the old playbook is being rewritten. At this exclusive, high-energy event, the world’s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. Register now.
Why Nvidia is being punished for delivering a blockbuster earnings report
Stock markets crashed globally yesterday and this morning, even though Nvidia, the world’s most valuable company, delivered blowout, above-expectations earnings. The company’s shares declined 3.15% yesterday. And the bloodletting continued for the red-hot semiconductor maker today: Nvidia was down another 3% by midmorning’s trading.Recommended VideoStill, the S&P 500 as a whole was flat by lunchtime, seemingly holding its own despite the storm in tech stocks. The Dow Jones industrial average was up.Why?It’s not just about a lot of negative headlines about AI.The context here is that Nvidia stock is up more than 31% year to date—nearly three times the gain of the S&P as a whole. So a lot of this selling looks like people who are quite rationally deciding to cash in some of those gains while they can. That perfectly understandable decision has a disproportionate impact: Because Nvidia and a handful of other tech stocks represent 40% of the valuation of the entire market, and 75% of its gains over the past three years, when Nvidia moves everyone else gets moved as well. Thus, it’s likely some traders see selling in Nvidia as a signal to sell the S&P 500 as a whole.In the longer run, Wall Street remains pretty bullish about tech stocks. J.P. Morgan and Wedbush both published notes this morning arguing that AI is still in its early days, and that capital expenditure on AI—much of which ends up being spent on Nvidia products—has years to run. The Fed factorHowever, there is a second dynamic at work that helps explain why Nvidia is getting pummeled while the rest of the market is back on its feet.Until recently, CME’s FedWatch index—which measures bets on what investors think the Federal Reserve will do at its next interest-rate setting meeting—was roughly evenly split over the idea that Chair Jerome Powell might keep rates on hold in December. That would have been negative for stocks, because traders prefer lower interest rates and the new waves of cheap money they deliver.Today, the prospect of a rate cut went up to 73%—meaning investors suddenly seem to think the Fed is becomingmore likelyto cut. We cannot say for sure, but one plausible reason for that change is that yesterday the U.S. government officially reported that its unemployment rate rose to 4.4% from 4.3% in September. That doesn’t sound like a big deal. But Fed governors and presidents have been vocally worrying about the labor market for months, and they only have one tool to help it: interest rate cuts.Pantheon Macroeconomics analysts Samuel Tombs and Oliver Allen put it this way: “We retain our forecast for the FOMC to ease policy again in December after yesterday’s labor market report, given clear signs that September’s 119K increase in payrolls overstates the trend, and the further rise in the unemployment rate. “The rise in the unemployment rate to 4.4% in September, from 4.3% in August, was more significant. The rounded 0.1pp rise fell short of the threshold for statistical significance, but the 0.3pp climb over the previous three months clears that hurdle. What’s more, the unrounded unemployment rate, 4.44%, was a whisker away from 4.5%,” Tombs and Allen said in a note to clients.If they are right, it explains why Nvidia is suffering so much today while the Dow Jones and the S&P are more solid. Nvidia investors sold upon hearing good news, while everyone else is buying into a Fed rate-cut scenario.Join us at the Fortune Workplace Innovation SummitMay 19–20, 2026, in Atlanta. The next era of workplace innovation is here—and the old playbook is being rewritten. At this exclusive, high-energy event, the world’s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. Register now.
Dollar carry trades set to trounce world’s booming stock markets
The dollar is regaining its crown as one of the world’s most appealing assets, defying talk of a “Sell America” trade that had raised troubling questions about the outlook for the global reserve currency. Recommended VideoA simple strategy of borrowing in low-yielding currencies like the Japanese yen or the Swiss franc and putting your money in dollars looks set to beat the implied returns on markets such as European stocks and Chinese government bonds once the volatility of these assets is taken into account, according to Bloomberg calculations.That suggests the dollar will maintain its critical position in global portfolios, despite worries about its future this year as President Donald Trump shook up the global economic order. A Bloomberg gauge of the dollar is down about 7% this year — its worst performance in eight years — but it has bounced back around 3% from a September low, in part because of the so-called carry trade.“The dollar will end up being one of the highest carry currencies again,” said Yuxuan Tang, a strategist at JPMorgan Private Bank in Hong Kong. “Whether it’s from a directional or carry perspective, it’s still going to be about a strong dollar,” she said.The implications of the dollar’s renewed appeal for investors can’t be overstated for global markets.Carry trades can drive massive capital flows, reshaping asset values and influencing sentiment from New York to Singapore. When investors borrow cheaply to chase higher returns elsewhere, liquidity is often amplified — fueling rallies in risky assets that can just as quickly unravel when volatility spikes. The appeal of dollar carry has been helped by a sharp drop in the greenback’s volatility, in part because a prolonged government shutdown dampened price swings in the $9.6 trillion-a-day global foreign exchange market. That reduces the risk for foreign traders loading up on dollar assets without hedging their currency exposure.To make the calculations, Bloomberg used earnings yields as a proxy for equity returns; the gap between borrowing rates in yen and Swiss francs and similar-maturity investment yields in dollars to estimate the carry; and bond indexes that capture a range of maturities for yields on government debt. Volatility was calculated for the next month, with option-implied measures used for the currencies and stocks and swaptions for bonds. The exception was in China and emerging-market debt, where realized volatility was used.Stock Market Fears The rising appeal of the carry trade comes as investors worry that an artificial intelligence-fueled rally in global stock markets will come to an end. The S&P 500 Index has jumped more than a third from its April lows, while indexes in Europe and China have also soared. The US equity risk premium, measured as the difference between the S&P 500’s earnings yield and the 10-year Treasury yield, has turned negative. US stocks now offer investors no return whatsoever on a risk-adjusted basis, presuming investors fund their bets by short-term borrowing and pocket a return in line with the earnings yield, the Bloomberg calculations show.The math is similar — albeit not as extreme — for other markets. Investors buying Chinese stocks and holding for the next month are likely to get returns of just 0.23% per percentage point of volatility on an annualized basis, according to the calculations, versus the 0.54% per percentage point of volatility they could pocket through the low-risk carry trade. Those holding Japanese stocks look set to do even worse.The Bloomberg dollar gauge was down 0.1% Tuesday in the US trading session after the ADP Research data suggested the labor market slowed in the second half of last month. As the longest US government shutdown on record is on the path to end, markets are choppy awaiting a slew of official data.To be sure, the bullish dollar carry trade is not without risks. A sudden drop in short-term rates would erode its advantage dramatically. That could happen if the Fed signals faster rate cuts than markets currently expect, hardly a black swan event given the uncertainty over economic data.“As the Fed may still cautiously reduce policy rates in the near term, the dollar could remain an attractive carry asset,” said Jacky Tang, Deutsche Bank AG’s chief investment officer for emerging markets and head of discretionary portfolio management. “However, there’s uncertainty next year as the Fed may change its pace of rate cuts with the new Fed chair.”Investors could also get equity returns wildly at odds with earnings yields, which are calculated by dividing earnings per share by the stock price. Although research has found that earnings yields have predictive value for stock returns, short-term market moves can be chaotic — something that few investors need telling after such an unpredictable year.Still, there’s plenty of hope for dollar bulls looking to ramp up long-dollar carry strategies into 2026. US inflation of 3% in September, well above the Fed’s 2% target, remains a sticking point for some officials. Fed official Austan Goolsbee recently expressed nerves about inflation, adding that he wants to see more data before deciding how to vote at the Fed’s December meeting. If strong data continues, a slower pace of easing could protect carry returns into next year.“Dollar carry trades may remain attractive as long as the macro and financial market backdrop remains resilient,” said Aroop Chatterjee, strategist at Wells Fargo in New York. Join us at the Fortune Workplace Innovation SummitMay 19–20, 2026, in Atlanta. The next era of workplace innovation is here—and the old playbook is being rewritten. At this exclusive, high-energy event, the world’s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. Register now.
Tech stocks linked to Bitcoin take a battering as crypto traders brace for Strategy to breach danger threshold
Tech stocks linked to Bitcoin staged a modest comeback in overnight trading, although it wasn’t enough to wipe away the losses they suffered yesterday. The market remains on edge as Bitcoin has lost 21% over the past month. In recent days, it has stabilized at around $87K per coin and was up 0.72% today. Crypto trading platform Coinbase was down 4.76% yesterday but was up 1.37% in overnight trading, while Robinhood was down 4.09% yesterday and then crept up 0.63% this morning, premarket. But the elephant in the digital asset room is Michael Saylor’s Strategy, the leading Bitcoin treasury company, whose stock market cap is now worth less than the Bitcoin it holds. It dropped 3.25% yesterday but was up 0.45% before the bell.Strategy’s market cap was $50.6 billion at the time of writing, and its 650,000 Bitcoins were worth $56.7 billion. The key metric for Strategy, however, is its “mNAV” (multiple to net asset value), which is a ratio describing the company’s theoretical enterprise value (currently $65.2 billion) to its Bitcoin holdings. That ratio was 1.15 this morning, meaning its enterprise value is worth 15% more than its Bitcoin.Recommended VideoHowever, if the mNAV falls below one, then Strategy faces a crisis: The reason for holding the stock vanishes, and no one will be likely to provide the company with more capital—a period of fierce selling could ensue.The situation was made more tense after Strategy CEO Phong Le said on a podcast that the company would be willing to sell some of its Bitcoin in order to meet the dividend commitments on its debt and preferred shares. “Now, as we are looking at Bitcoin winter, as we see our mNAV compressing, my hope is our mNAV doesn’t go below one,” he said. “But if we do, and we didn’t have other access to capital, we would sell Bitcoin.” On Monday, the company published an investor presentation which confirmed (on page 11) that it will begin selling Bitcoin if the mNAV falls below one.The statements were extraordinary because Saylor, the founder, has repeatedly said he would never sell. Strategy currently holds just over 3% of all Bitcoin. If it was forced to sell in order to raise cash, that too would likely start an avalanche. (The company did not immediately respond when contacted for comment.)Traders betting on leveraged plays against Strategy have already been wiped out. Two exchange-traded funds, MSTX and MSTU, which offered double the returns of the underlying Strategy stock, have lost more than 80% of their value, according to Bloomberg. Together with a third, MSTP, they have lost $1.5 billion in value over the past month.Strategy shares declined Tuesday after the company said it had created a $1.44 billion “U.S. dollar reserve” to fund its dividends, and had enough cash to survive the next 12 to 24 months, according to theFinancial Times.Some crypto investment experts have a negative outlook. Patrick Horsman, chief investment officer at BNB Plus, another crypto treasury company, told theWall Street Journal,“I think we could see Bitcoin get all the way back to $60,000 … We don’t think the pain is over.”Here’s a snapshot of the markets ahead of the opening bell in New York this morning:S&P 500 futureswere up 0.24% this morning. The last session closed down 0.53%. TheSTOXX Europe 600was up 0.35% in early trading. The U.K.’sFTSE 100was up 0.38% in early trading. Japan’sNikkei 225was flat.China’sCSI 300was down 0.48%.The South KoreaKOSPIwas up 1.9%. India’sNifty 50is down 0.55%. Bitcoinwas at $87K.Join us at the Fortune Workplace Innovation SummitMay 19–20, 2026, in Atlanta. The next era of workplace innovation is here—and the old playbook is being rewritten. At this exclusive, high-energy event, the world’s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. Register now.