Artificial intelligence is fueling a big increase in U.S. convertible bond sales as companies search for more affordable ways to pay for data centers, cloud growth, power systems, and chip projects.
U.S. companies are using the convertible bond market at a record pace, especially those connected to AI, which are driving up demand for debt that can turn into equity.
AI companies are turning to convertible debt
This increase is happening because building AI infrastructure is very expensive.
Reuters said U.S. companies issued about $34 billion in convertible bonds in the first four months of 2026, which is more than twice as much as the same time last year.
Data from Bank of America Global Research and Barclays Research suggest the market could beat last year’s record of over $120 billion.
About half of this year’s convertible bonds are linked to AI. Companies are using this debt to pay for data centers, power systems, and cloud growth, and some are also refinancing debt from the pandemic boom.
Big AI and infrastructure deals lead the market
Several major companies have already raised billions through convertible bonds this year.
U.S. News shared that Oracle raised $5 billion, CoreWeave raised $4 billion, and Australia’s IREN Limited issued $2.6 billion in convertible bonds. Power and chip companies are also joining in, like NextEra Energy with $2.3 billion and On Semiconductor with $1.3 billion.
Michael Youngworth, managing director and head of global convertibles at Bank of America Securities, shared that most of this activity is for capital spending, especially on AI, which he said is different from past cycles.
Why convertibles are attractive now
Convertible bonds are popular because they let companies borrow at lower rates and give investors a chance to benefit if the company’s stock goes up.
Convertibles are similar to regular debt since they pay fixed interest, but they can also be swapped for shares if the stock price reaches a set level. This is especially valuable when stock prices are changing a lot.
This is important because regular borrowing is still costly with today’s high interest rates. 10-year U.S. Treasury yields are at a 16-month high, making it more expensive to borrow in bond markets.
For example, Tempus AI, a health tech company that uses AI to study clinical and genetic data, raised $400 million with a six-year convertible bond that has no interest payments or increase in principal at maturity. The bonds will turn into stock if Tempus AI shares reach $69.26, which is about 40% higher than the price when the bonds were sold in May.
Investor demand is growing, but risks remain
Hedge funds and big asset managers are also getting involved in the market.
Venu Krishna, managing director and head of U.S. equity strategy at Barclays, said that long-only investors are buying into semiconductors, which he called “the hottest part of the market right now,” thanks to AI spending.
However, the boom is also attracting riskier companies. WhiteFiber raised $230 million in January with a five-year convertible bond to expand data centers. The company went public in August 2025, and its shares have risen almost 60% in 2026.
AI funding is reshaping the bond market
For companies, convertible bonds are a cheaper way to raise money while spending heavily on AI infrastructure. For investors, they offer a chance to profit if AI-related stocks keep going up.
But the rising interest also shows how much the AI boom is changing financial markets. What began as a push for better models and bigger data centers is now shaping how companies borrow, how investors take risks, and how fast money is flowing into anything related to AI.
