Apollo warns hyperscaler debt looks riskier as AI spending rises

Apollo Global Management said credit default swaps tied to hyperscaler debt have widened, suggesting investors are assigning more risk to bonds issued by major cloud and AI infrastructure companies. The firm’s chief economist, Torsten Slok, argued that the move reflects concern about a debtfinanced AI spending cycle, rising leverage, negative free cash flow, and uncertainty over how quickly those investments will pay off. The warning comes as some frontier AI model companies have called for a slower pace of technical progress because of safety concerns, which could affect demand for cloud computing capacity. Still, some technology investors said it is too early to draw firm conclusions, pointing to improving margins and the possibility that profitability will strengthen over the next few years.