Goldman Sachs: Chipmakers' CDS Spreads Exceed Cloud Providers as AI Default Risk Shifts

On Sunday, Goldman Sachs' Sales & Trading desk circulated four credit reports pointing to a shift in where the AI trade's credit risk is being priced. A CDS basket covering chipmakers Broadcom, AMD, Nvidia and Intel has moved, for the first time in nearly three months, above a comparable basket of hyperscale cloud companies including Oracle, Meta, Amazon, Alphabet and Microsoft. CDS spreads are widely used as a market-based gauge of perceived default risk.

According to the material, the chipmaker basket stood at roughly 80 basis points in early August, about 20 basis points below the cloud names. Three months later, the spread had roughly doubled to around 160 basis points, putting it above the cloud basket for the first time.

Alongside the widening, turnover in AI-related credit default swaps has climbed to a weekly range of 8 to 10 billion USD, approximately seven times the level recorded a year earlier. Alisha Pasi, a credit trader at Goldman Sachs, described the situation in the report as "a migration of risk."

The material also mentions two forces behind the higher chipmaker risk readings: faster GPU generational turnover and rising depreciation pressure, plus chip vendors extending financing and guarantees to support downstream customers' expansion. It does not independently verify these factors.

The event currently rests at the point of Goldman Sachs' Sunday report and the spread and turnover data it disclosed. The material does not indicate any subsequent development.