“Every morning the opening screen on my Bloomberg is what’s going on with CDS spreads on Oracle debt,” Morgan Stanley Wealth Management CIO Lisa Shalett told Fortune in October, seeming to speak for a market that was increasingly worried about the bursting of a bubble in artificial intelligence. CDS, as students of the 2008 financial crisis know, stands for “credit default swaps,” a financial instrument to hedge against giant debt loads elsewhere in the market. And the reason Shalett highlighted Oracle’s CDS was that the Larry Ellison–founded software giant has stood out as a relative anomaly among the “hyperscaler” companies fueling billions in data center investment for having just too much debt.
“If people start getting worried about Oracle’s ability to pay,” Shalett told Fortune, “that’s gonna be an early indication to us that people are getting nervous.”
