During the last two weeks, AI stocks took a hit with stock prices falling for 8 trading days in a row. That was the longest losing streak since 2008. The question many people are asking is: will there be any return from these stocks? This matters to anyone who owns large US technology stocks, whether directly or through an index fund, because these companies make up a large part of the major indices. Five of the seven stocks known as the Magnificent Seven appear in the comparison below.
On Monday shares recovered and the Nasdaq Composite rose 1%, but bond investors did not follow. CoreWeave, a company that rents out computing power for AI, closed slightly lower, and investors still demand an interest rate of about 15% a year to hold its bonds. Oracle’s shares fell 9% last week, and the cost of insuring its debt against default rose again on Monday.
From Cash Flow to Credit
The reason lies in how the AI build-out is paid for. Until recently, the largest technology companies financed data centres, chips and power mostly from the cash their businesses generated. A growing share now comes from borrowing, in the form of corporate bonds. Alphabet, Amazon, Meta and Oracle had issued more than $228 billion of bonds this year as of 13 October, more than twice the total for all of 2025, according to LSEG. Bond investors lend money for years and want to know whether it comes back, so they often examine a balance sheet more closely than stock investors do. The Obermatt Safety Rank, in particular the Leverage and Refinancing Ranks, helps you evaluate the health of a stock’s financing.
Oracle and CoreWeave show how different borrowing can be. Oracle has issued about $118 billion of long-term debt and carries a further $39 billion of capital and lease obligations. Its credit rating from S&P sits at the lowest level still counted as investment grade, and a downgrade could raise its borrowing costs. On the other hand, its Obermatt Safety Rank is 53, meaning it’s still better financed than 53% of its peers. CoreWeave borrows to buy chips and build data centres and relies on long-term customer contracts to repay the debt, and its rating is already below investment grade. This is also reflected in its Safety Rank, which stands at 12.
What the Safety Rank Asks About Debt
The Obermatt Safety Rank combines three detailed ranks that mirror the questions lenders ask. Our article Safety-First Investing When Rates Rise of 8 October explains how it works.
- Leverage shows how much debt a company carries compared with what it earns.
- Refinancing shows how much of the debt falls due soon and has to be replaced.
- Liquidity shows whether a company has enough cash to pay its bills and interest in the near term.
Each rank compares a company with its industry peers. The ranks are built on reported financial statements, so they change with each quarterly report and lag daily bond prices. They show the financing position behind a market move, not the move itself.
Three Ways to Fund the Build-Out
We showcase Obermatt’s latest ranks for eleven companies in three groups: cash-rich spenders, builders that rely more on debt and suppliers that provide the equipment.
Cash-rich spenders
Name | Safety | Leverage | Refinancing | Liquidity | Growth |
|---|---|---|---|---|---|
1. XX-Large • Interactive Media & Services | 85 | 71 | 59 | 93 | 100 |
2. XX-Large • Systems Software | 96 | 57 | 81 | 92 | 97 |
3. XX-Large • Interactive Media & Services | 82 | 59 | 60 | 91 | 98 |
4. XX-Large • Internet Retail | 65 | 81 | 23 | 84 | 99 |
Debt-funded builders
Name | Safety | Leverage | Refinancing | Liquidity | Growth |
|---|---|---|---|---|---|
1. XX-Large • Systems Software | 53 | 29 | 41 | 89 | 83 |
2. Large • Internet Services & Infrastructure | 12 | 11 | 9 | 35 | 47 |
3. Medium • Internet Services & Infrastructure | 26 | 24 | 41 | 38 | 51 |
Suppliers
Name | Safety | Leverage | Refinancing | Liquidity | Growth |
|---|---|---|---|---|---|
1. XX-Large • Semiconductors | 76 | 53 | 39 | 92 | 87 |
2. XX-Large • Technology Hardware & Peripherals | 8 | 1 | 11 | 63 | 98 |
3. XX-Large • Electr. Components & Equipment | 82 | 62 | 28 | 95 | 47 |
4. XX-Large • Electr. Components & Equipment | 58 | 32 | 42 | 70 | 83 |
The four cash-rich spenders pay for most of their AI investment from their own earnings and add bonds on top, and they are the most solidly financed of the three groups. Alphabet, Microsoft and Meta reach Safety Ranks between 82 and 96, which means they are financed more safely than the large majority of their peers, and they combine this with Growth Ranks of 97 or higher. Amazon is the exception within the group. Its Safety Rank of 65 is held back by a Refinancing Rank of 23, which means that more of its debt has to be replaced soon than at most of its peers.
The debt-funded builders construct data centres and rent out computing power, and they rely on borrowing and on long-term customer contracts to repay it. Oracle reaches a Safety Rank of 53 because strong liquidity meets a heavy debt load. Its Liquidity Rank of 89 means that its cash and earnings cover near-term obligations better than those of most peers, while its Leverage Rank of 29 means that it carries more debt relative to its earnings than most of them. CoreWeave, at 12, and Applied Digital, at 26, rank below 50 on all three detailed ranks. They carry more debt, have more of it falling due soon and hold less cash to cover it than most of their peers.
The suppliers sell the chips, servers and electrical equipment that go into the data centres, and their financing differs widely. Dell has the lowest Safety Rank of the group at 8. Its Leverage Rank of 1 means it carries more debt relative to its earnings than nearly all of its peers, and its Refinancing Rank of 11 means that a large part of that debt falls due soon: about $8.5 billion of its $34.5 billion at the end of July. Its very strong growth, with a record order backlog of $95 billion, therefore depends on regular access to lenders. Nvidia’s Safety Rank of 76 rests on a Liquidity Rank of 92, which means that its cash and earnings cover near-term obligations better than those of most peers. ABB and Schneider Electric, which sell to many industries, reach 82 and 58.
Growth Paid in Cash, Growth Paid in Debt
The Growth Rank compares a company’s revenue growth, profit growth, capital growth and stock returns with those of its peers. It looks the same on the screen whether the growth is paid from cash or from borrowing, which is why it should be read next to the Safety Rank. Alphabet, Microsoft, Meta and Amazon rank between 97 and 100 on growth and have Safety Ranks of 65 or higher, so their growth is backed by solid financing. Dell shows a different mix. Its Growth Rank of 98 comes with a Safety Rank of 8, which means that most of its peers are financed more safely. At CoreWeave the Revenue Growth Rank is 100, while the Profit Growth Rank is 1 and the Safety Rank is 12. Its sales grow quickly, but its profit growth is among the weakest in its peer group and its financing is weak.
This difference matters when credit becomes scarce. Growth paid from cash can continue, while growth paid with borrowed money depends on lenders continuing to provide funds on acceptable terms, which is the question the bond market is testing. The ranks show how each company is financed today, and investors can weigh this against the growth they expect. In the Obermatt Stock Filter, investors can set a minimum Safety Rank and a minimum Growth Rank at the same time, for example 70 for Safety and 80 for Growth. The result is a list of companies that grow quickly and are financed more soundly than most of their peers. Fast-growing companies with weak financing, such as Dell in this comparison, drop out. Adding a minimum Value Rank, for example 60, narrows the list further to companies that are also priced more reasonably than most of their peers.