Credit Market Outlook & Strategy: The case for hyperscaler valuations is falling on issuance-filled ears

Research evidence excerpt

Credit Market Outlook & Strategy: The case for hyperscaler valuations is falling on issuance-filled ears

Nathaniel Rosenbaum, CFA AC North America Credit Research

(1-212) 834-2370 24 July 2026 J P M O R G A N

nathaniel.rosenbaum@jpmorgan.com

The case for hyperscaler valuations is falling on issuance-

filled ears

It remains a tale of two markets in IG, with another week of slightly wider overall

spreads and significantly wider hyperscaler spreads. Our view last week to start scaling

into hyperscalers was clearly wrong thus far, though we outlined earnings as the

potential catalyst and the bulk of these are this coming week so we are sticking with the

view for now and walk through some more valuation thoughts below.

Starting with the bigger picture, JULI widened 2bp to 93bp WTD, split between

hyperscalers + 10bp WTD to 145bp vs ex-hyperscalers just +1bp WTD to 90bp. In other

words, hyperscalers offer a 61% spread pickup versus the rest of the market currently.

Another way to think about this is from a DTS standpoint (duration times spread),

which we show below. Hyperscalers make up just 4.3% par of the market but now make

up 8.1% on a DTS basis so from an excess return standpoint the potential out/

underperformance versus the benchmark tied to the sector is quite significant. Even

though US Banks are nearly 3x larger than the hyperscalers in our index on a par basis,

on a DTS basis they are close to equal.

Figure 3: Hypers much wider vs rest of market not nearly as much Figure 4: Hyperscalers make up a significant amount of potential out/

underperformance DTS-wise

150 Spread, bp 13%

JULI 12%

135 JULI ex-Hyperscalers 11%

Hyperscalers 10%

120 9%

8%

7% Hyperscalers % Par share

6% Hyperscalers % DTS share 90

5% US Banks % Par share

75 4% US Banks % DTS share

3%

60 2%