Global Markets Daily: Hyperscaler Credit vs. Equity: More Issuance, a Higher Beta, and a Different Focus on Cash Flow

Research evidence excerpt

Global Markets Daily: Hyperscaler Credit vs. Equity: More Issuance, a Higher Beta, and a Different Focus on Cash Flow

Economics Research

28 July 2026 | 8:14AM EDT

Global Markets Daily: Hyperscaler Credit vs. Equity: More Issuance, a

Higher Beta, and a Different Focus on Cash Flow

n Heavy AI-related capex has reshaped how hyperscaler credit and equity Shamshad Ali

+1(212)902-6712 |

co-move. As these firms increasingly fund investments with debt, equity values shamshad.ali@gs.com

Goldman Sachs & Co. LLC

have become more tethered to fluctuating asset valuations, while structurally

imposing a higher cost of credit.

n Credit’s beta to equity returns should increase with bond maturity, given an

upward-sloping term premium. While elevated yield-based demand has

dampened the beta for long-duration credit in the broader market, the AI capex

cycle has lifted it for hyperscaler credit—especially as spread volatility has been

felt acutely in the long-end of the curve.

n Credit spreads have widened alongside a deterioration in forward free cash flow

yield for hyperscalers. As a result, the path ahead for credit likely hinges on some

improvement in forward estimates of free cash flow generation.

n That said, the manner of improvement matters more for credit vs. equity relative

value. A scenario of free cash flow gains from declining capex would likely favor

credit, while a scenario of rising net income and operating cash flow would likely

favor equity, as investors may read it as an inflection point for additional value

accrual across the AI stack (with equities more exposed to that potential upside).

Hyperscaler Credit vs. Equity: More Issuance, a Higher Beta, and a Different

Focus on Cash Flow

Increasing focus on AI-related capex has driven a few themes in markets. In equities,