Meta-verse became Meta-wide
The AI story now runs on credit
Hyperscalers are funding the build-out with debt pushing record issuance into credit markets. Equity cheered early. Now credit is doing the heavy lifting — and equity price action is starting to notice.
More than half a trillion
Nothing new here but numbers just seem to be going up and up. Analysts expect the Hyperscalers to spend $520 billion on CapEx in 2027.
Amazon: $150B
Alphabet: $131B
Meta: $121B
Microsoft: $117B
Source: fiscal.ai
Capex eating cash
KKR says that capex as a percentage of operating cash flows is reaching unprecedented levels for the hyperscalers.
Source: KKR
AI credit
AI is now the single largest source of incremental credit supply. Hyperscaler capex has tripled since 2023. Projected spend: $2.7 TRILLION from 2025-2029. And they're pivoting hard to debt - Oracle, Meta, Google, Amazon priced $90B in deals in Q4 alone.
Source: Apollo
Source: Apollo
One big AI bet
If hyperscalers fund just 20% of AI capex through IG, AMZN becomes the 3rd largest issuer in the index. Google goes from 67th to 8th. A "diversified" portfolio might just be one big AI bet.
Source: BofA
Meta-verse became Meta-wide
AA-rated Meta debt trades WIDER than the overall IG index (~80 bps). The flood of high-quality hyperscaler issuance is pushing the market's "risk-free" spread anchor higher. This has potential to reprice the entire market.
Source: FRED
The equity market seems to notice
Selling Mag7
Mega-cap growth & Tech positioning registers a big drop in the latest reading.
Source: Deutsche Bank
Breaking December lows
Neil Sethi: "Mag-7 ETF ended the week at the least since Nov 24th. Isn't there some rule about breaking the December lows?"
Source: Trading View
Beaten by Little Brother
US small caps now lead the way while Nasdaq and Mag-7 remain below November peaks.
Source: Macrobond
Rotation
The Mag 7 are at a key level relative to the equal-weight index.
