Hyperscaler cost of capital hits 10%, says Savita Subramanian

The jump in hyperscaler borrowing costs comes as bond yields spiked last week, with the market pricing in risk similar to the Great Financial Crisis, according to a chart from Michael Hartnett's team at Bank of America. Yields have since cooled, with the 10-year Treasury at 5.08% this morning, down from a recent peak of 5.3%.

Despite the pullback, Subramanian's note underscores how central AI spending has become to equity conversations. "Most of our equity meetings are 90% AI, 10% everything else," she said. Her forecast is that the capex wave has further to run, but a "marked shift in trend" could arrive next year if yields don't decrease.

Markets themselves were mixed today, with oil at $108 per barrel and U.S. futures pointing higher after Friday's tech-led selloff. As IG's Chris Beauchamp put it, last week looks more like a healthy rotation than the beginning of something more dramatic.