DoubleLine: Alphabet and Amazon Bonds Look Attractive After AI Selloff
nashnova research
DoubleLine's head of corporate credit Robert Cohen says the AI-driven debt binge has pushed AA-rated Alphabet and Amazon bonds to index-level spreads — yet their credit quality sits several notches above the index, opening a window where risk is lower but compensation matches the market.
Why is a former AI-bubble skeptic turning bullish on tech debt?
DoubleLine corporate credit head Robert Cohen previously warned that the AI bubble was bleeding into credit markets; underweighting tech debt was the right call then.
Now he says spreads on high-quality hyperscalers — the handful of tech giants that build massive data centers, like Google and Amazon — have widened to levels worth watching.
This means → he is not calling a bottom; he is saying "the price is cheap enough, and the risk hasn't grown." In his words: "I don't need to call the bottom."
How cheap have Alphabet and Amazon bonds become?
Alphabet's 10-year bond issued last month traded at a spread of roughly 81 basis points as of last Friday; its 10-year issued in February has widened about 15 bps to ~76 bps since launch.
The broad investment-grade index averages a spread of 80 bps — Alphabet's spread now matches the index.
In plain terms = you earn the same spread as the market average, but Alphabet is rated AA+ and Amazon AA — several notches above the index mean. Same price, lower risk.
What drove tech bonds down to these levels?
Investment-grade tech credit spreads now run nearly 10 bps wider than the broad high-grade market; CDS prices — essentially insurance premiums against default — on big tech names keep climbing.
Cohen attributes this to "technical supply pressure": tech giants are issuing debt at a rapid clip to fund AI buildouts, flooding the market with new bonds and depressing prices.
This means → prices fell not because these companies deteriorated, but because too much new paper hit the market for buyers to absorb at once — exactly the kind of setup Cohen prefers.
Where is the risk — could spreads widen further?
The market is bracing for September investment-grade issuance that could set an all-time record; the AI spending race shows no sign of slowing — supply pressure may persist.
Cohen concedes he cannot predict when supply pressure will stop weighing on valuations; spreads could keep widening.
He flags a knock-on effect: as AA-rated tech debt grows more attractive, riskier borrowers must offer higher yields to compete for capital; data-center bonds may need even wider spread premiums to keep drawing buyers.
In plain terms = the giants are issuing so much debt that they are not just compressing their own prices — they may be pushing up borrowing costs for smaller, weaker credits across the market.
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