AI-focused investors pile into hedges as fears of a tech selloff rise

Investors and tech executives are stepping up efforts to shield themselves from an AI-driven market reversal as doubts grow over the durability of massive bets on artificial intelligence. Hedging demand—ranging from put options to credit-default swaps—has climbed following a sharp slide in technology shares, with the Nasdaq Composite down 2.9% Friday and logging its worst month since March 2025. CoreWeave saw record put-option trading in October, including popular 2028 contracts paying off if the stock falls to $35 from about $55. In credit markets, the cost to insure debt of Amazon, Alphabet, Microsoft, Meta and Oracle has risen to the highest since 2021, with Oracle’s CDS widening by more than a percentage point. Trading firms are also rolling out new tools to manage AI-infrastructure exposure: Jump Trading launched a computing-power desk offering derivatives to hedge against falling chip rental prices, while Susquehanna is fielding interest in contracts tied to computing-power indexes. Nvidia B300 rental rates are up roughly 56% this year to $7.56 an hour, but operators are seeking protection should prices retreat as capacity builds. Despite the uptick in activity, hedges remain small relative to the broader AI investment surge.

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