Recently, there has been an interesting phenomenon in the bond market: the borrowing costs for large-scale cloud computing companies are skyrocketing, while the financing environment for traditional industrial enterprises is actually improving.

Looking at the period from May 2025 to January 2026, the credit spreads of investment-grade, mega cloud service providers (excluding Oracle) have continued to widen, while the spreads for investment-grade industrial sectors have been narrowing simultaneously. This divergence in directions has caused a noticeable split in market pricing logic.

Why is this happening? There are mainly two driving forces at play:

On one hand, companies related to AI infrastructure are aggressively issuing debt and spending heavily on capital expenditures, which signals to investors higher debt risks and leverage expectations. As a result, financing costs are pushed higher, requiring greater risk premiums for investors to buy these bonds.

On the other hand, the credit environment for traditional industries is improving, and economic data is less alarming. Funds naturally flow toward areas with lower uncertainty, benefiting the industrial sector as a result.

What does this mean for the market? The marginal financing costs for technology-weighted sectors may continue to rise, putting pressure on valuations, especially for growth-oriented companies that may face valuation suppression in the short term. Meanwhile, the industrial sector is the relative winner, becoming a new haven for capital seeking value.