Investors Increase Downside Protection in Major Tech Companies

The Kobeissi Letter posted on X that investors are increasingly seeking downside protection in major technology companies, with the total value of debt insured against default reaching $10 billion. This marks a significant rise in net notional credit default swaps (CDS) outstanding, which have surged nearly 400% from $2.2 billion just 13 months ago. Oracle leads the pack with $6.0 billion in CDS, followed by Amazon at $1.7 billion and Alphabet at $895 million. Meta has $687 million, Microsoft $521 million, and Nvidia $220 million in CDS. Notably, a year ago, CDS contracts for many of these companies were nonexistent, highlighting the rapid growth in this financial instrument. This trend underscores the increasing demand for financial protection amid the ongoing AI debt expansion.