Wall Street Races to Cut Its Risk From AI’s Borrowing Binge

Wall Street is gearing up to lend massive amounts of money to the biggest players in artificial intelligence — and simultaneously trying to figure out how to protect itself from any bubble that its financing may be helping to inflate.

The urgency at banks to shed risk is visible all over credit markets. The cost of protecting Oracle Corp. debt against default using derivatives has risen to the highest since the Global Financial Crisis. Morgan Stanley has looked at using a significant risk transfer — a form of insurance against loan losses — to diffuse some of the risk tied to its tech company borrowers.