The mega-caps have seen a lot of back-and-forth so far in 2026. Of the ten mega-caps below, five are up for the year, and five are down, with Apple (AAPL) up the most (27.7%) and Oracle (ORCL) down the most (-33%). On average, these ten stocks are up less than 1% in 2026, well below the S&P 500's gain of 12.5%. At the moment, three are overbought, five are neutral, and two are oversold. This is helpful evidence that the mega-caps are no longer trading as a monolith.
A few years ago, the mega-caps were swimming in cash, but not anymore. The AI Boom has pushed these Tech behemoths to take on massive debt to fund their AI ambitions and defend their moats.
Because of the debt raises, credit default swaps (CDS) have begun trading on these names. Corporate bond owners can buy CDS to hedge against default, while institutional investors who think the AI trade has run ahead of itself can buy CDS to profit if they're right. CDS prices go up when default risk increases.
This brings us to an index we've built tracking default risk for the ten mega-caps mentioned above. Below is a look at how the index has traded over the last year.
While not super high yet, CDS prices for the group are not heading in the right direction, and this is not something that bulls want to see become a bigger story in the months ahead.
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