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JPMorgan says AI label alone no longer secures lender funding

JPMorgan says lenders now want evidence that AI-linked firms can fund investment, service debt and turn spending into cash, as default insurance costs on some of them hit records.

Why it matters: AI has been a major driver of risk-taking across markets, Bitcoin included, so credit stress among AI-linked borrowers could spill into crypto, JPMorgan warns.

InvestIn.News NewsDesk · 1 min read
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Image: CoinDesk
Original reporting: Omkar Godbole, CoinDesk

Key points

  • Justin Biemann of J.P. Morgan Private Bank said in a 23 Oct report that companies must show they can finance investment, service debt and eventually generate cash flow.
  • Morgan Stanley data cited by CoinDesk put weekly credit-default-swap trading on bonds from Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom and Nvidia at more than $9bn on average in September, up from under $2bn a week in July.

JPMorgan says the AI label alone no longer secures lender funding, with credit markets increasingly asking whether AI-linked companies can pay their way. Justin Biemann, global investment strategist at J.P. Morgan Private Bank, wrote in a report published 23 Oct that firms must show they can finance investment, service debt and eventually turn spending into cash flow.

The strain is visible in credit-default swaps, the insurance buyers pay a yearly premium for against a borrower defaulting.

Biemann said CDS should be read as warning lights rather than countdown clocks, and that protection on the largest AI leaders at 50 to 120 basis points looks more like portfolio insurance than a distress prediction.

Read the full story on CoinDesk

Live updates on NewsFeeds:AIDesk editor: Keshav Aggarwal (accountable for this page; this summary was not edited by hand)

How this was produced: an AI model wrote this summary of CoinDesk’s report, which we credit and link above. Read our Editorial and AI policy. Spotted a mistake? See Corrections.

Not investment advice. Read the risk disclaimer.

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