Jefferies warned that rising credit spreads for Oracle and CoreWeave signal the market may be losing its appetite to fund the AI infrastructure boom at current terms. In a GREED and fear note dated October 17, Christopher Wood said investors should stay laser focused on borrowing conditions as companies continue to deploy capital at a pace that assumes cheap funding will persist.
Spreads move fast in September
Oracle’s five-year credit default swap spread jumped from 186 basis points on September 11 to 288 basis points. CoreWeave’s spread surged from 749 basis points to 1,118 basis points over the same window, reflecting the sharper repricing of a private, debt-heavy operator. The report treats both moves as early evidence that lenders are demanding more compensation for the credit risk attached to the AI capex cycle that began in early 2023.
Earnings growth set to decelerate
A companion Jefferies note from October 13, titled "Diversifying Beyond AI," projects consensus earnings growth for global AI stocks moderating from around 100 percent in 2026 to 30 percent in 2027 and 22 percent in 2028. The valuation gap remains wide: AI names trade at 23 times forward earnings versus 13 times for non-AI peers. That premium leaves little room for disappointment if financing costs keep climbing.
The funding question
The report does not argue that capital has dried up. It frames the spread widening as a warning light rather than a stop sign. But the arithmetic is unforgiving: data centres and compute clusters require continuous, large-scale borrowing. If spreads stay elevated, the hurdle rate for new projects rises, and the marginal return on each incremental GPU cluster has to clear a higher bar. Wood’s message is that the market’s willingness to fund the boom on yesterday’s terms should not be taken for granted.