A Hedge Against AI Crash Emerges as Oracle CDS Market Explodes

Oracle Corp., the once stodgy database giant that’s borrowed tens of billions and tethered its fortunes to the artificial intelligence boom, is quickly emerging as the credit market’s barometer for AI risk.

Traders have piled into the company’s credit-default swaps in recent months as Oracle’s massive AI-related spending spree, its central role in a web of interrelated deals, and its weaker credit grades compared with players such as Microsoft Corp. or Alphabet Inc. have made the contracts the market’s preferred way to hedge — and bet against — the AI boom.

The price to protect against the ...