Lenders are done financing AI on faith, JPMorgan says
JPMorgan says an AI label is no longer enough to attract lenders; firms must demonstrate they can fund investment, repay debt and generate cash flow. Credit-default-swap activity tied to major AI companies rose sharply, while protection costs for some debt-dependent AI infrastructure firms reached alarming levels. One unnamed company’s five-year CDS spread hit 1,100 basis points, implying a market-estimated default probability of around 50% over five years. Still, JPMorgan cautions that CDS are warning signals, not predictions of imminent collapse: protection costs for cash-rich AI leaders remain modest, and broader investment-grade credit markets are relatively stable. Weakness in AI could also weigh on crypto, since AI has helped drive risk appetite and bitcoin’s rally.
