Meta's credit risk indicator hits record high on increased AI spending plan

Oct 22 (Reuters) - The cost of insuring Meta Platforms' debt against default touched an all-time high on Thursday, as investors grappled with concerns about its plan to spend more on its AI build-out.

Meta raised the lower end of its annual forecast for capital expenditure to between $135 billion and $145 billion this year, up from $130 billion to $145 billion expected previously.

As a result, five-year credit default swaps widened 7.6 basis points to a record high of 114.79 bps and were set for its biggest one-day jump since at least 2025, Markit data showed. Its shares META.O were last down 6% at $655.5, hitting their lowest in about six weeks.

Investors are growing more cautious about debt-fueled AI spending in the face of rising borrowing costs, with neocloud firm CoreWeave CRWV.O at the center of a storm that has erased more than 34% of its market value this month.

CoreWeave shares slumped 8.3% on Thursday, while rival Nebius Group NBIS.O and data center operators IREN IREN.O and Applied Digital APLD.O also saw heavy losses.

US chip stocks, widely viewed as one of the biggest winners of the AI boom, also sold off heavily with the Philadelphia Semiconductor Index .SOX set to erase more than $744 billion in market value on Thursday alone.

Five-year credit default swaps of hyperscaler Oracle ORCL.N also stood close to a record high, while that of Amazon.com AMZN.O held near its highest level since March 2020, according to S&P Global Market Intelligence data.

Oracle and Alphabet GOOGL.O shares dropped more than 2%, while Microsoft MSFT.O slipped 1.5% and Amazon fell 4.1%.