American corporations are turning to convertible bonds in record numbers as artificial intelligence companies drive unprecedented demand for financing instruments that can transform into company stock during market upswings.
Convertible bond issuance in the United States hit approximately $34 billion during the opening four months of 2026, representing more than twice the volume from the corresponding timeframe in the previous year, data from Bank of America Global Research and Barclays Research shows. This aggressive start positions the market to exceed last year’s annual record of more than $120 billion.
About half of this year’s bond offerings connect to artificial intelligence in some capacity, highlighting how the technology sector is simultaneously addressing corporate capital requirements and investor enthusiasm. Organizations are utilizing convertible financing to support data center construction, electrical infrastructure projects, and cloud service expansion, while simultaneously refinancing debt originally issued during the pandemic period.
“A lot of it is to build out capital expenditure, particularly AI, and that’s unusual and not something we’ve seen in previous cycles,” said Michael Youngworth, managing director and head of global convertibles at Bank of America Securities.
Major transactions include Oracle’s $5 billion fundraising effort, a $4 billion issuance from cloud infrastructure firm CoreWeave, and $2.6 billion raised by Australia-based data center company IREN Limited.
Energy providers and semiconductor manufacturers have similarly accessed this market: NextEra Energy secured $2.3 billion while On Semiconductor collected $1.3 billion.
Industry analysts note that refinancing activities are also driving growth, as organizations replace convertible bonds originally issued during the 2020-2021 pandemic surge, which are now nearing their standard five to six-year maturity periods. Recent refinancing examples include Duke Energy’s $1.5 billion deal and Microchip Technology’s $900 million offering.
Within today’s elevated interest rate climate, where conventional lending carries high costs and stock offerings reduce existing shareholder value, convertible instruments have gained special appeal for AI-centered companies funding substantial investments.
These financial instruments provide fixed interest payments similar to standard debt but allow conversion to company shares when stock prices exceed a specified threshold. This conversion mechanism essentially includes a stock purchase option, which increases in worth alongside equity market volatility and larger stock price movements.
The potential for such returns enables these bonds to sell at lower interest rates than traditional debt. Health technology firm Tempus AI, which applies artificial intelligence to examine clinical and genetic healthcare data, raised $400 million through a six-year convertible offering zero interest payments and no principal growth at maturity.
These bonds will transform into stock ownership if share prices reach $69.26, representing roughly 40% above the stock’s value when the offering launched in May.
The combined attractiveness of convertibles has maintained investor interest throughout this unpredictable, high-rate period. Standard 10-year U.S. Treasury yields have reached 16-month peaks, increasing borrowing expenses across fixed-income markets.
Hedge funds and major asset management firms control the convertible investor landscape, with hedge funds attempting to profit from relative value opportunities within the volatility assumptions built into convertibles, explained Venu Krishna, managing director and head of U.S. equity strategy at Barclays.
Stock conversion possibilities attract institutional investors examining AI-related enterprises, where potential gains remain attractive despite underlying credit weaknesses.
Long-term investors are “buying for exposure to semiconductors – the hottest part of the market right now, driven by AI capital spending,” Krishna said.
This investor appetite has attracted a broader spectrum of companies to the market, including organizations with riskier financial profiles than the prominent names leading AI expansion.
In January, WhiteFiber raised $230 million through a five-year convertible bond sale, with funds primarily designated for data center expansion.
The company, which completed its public offering in August 2025, carries a negative forward price-to-earnings ratio of approximately 36. Nevertheless, its share price suggests an enterprise value of roughly 19 times forward earnings before interest, taxes, depreciation, and amortization, according to LSEG data, exceeding peer companies and indicating investor expectations for substantial future growth.
Stock values have climbed nearly 60% during 2026.
“The market has performed quite well and demand has improved, and all this has allowed corporates to come to the convert space at very attractive terms,” said Youngworth. Companies are not necessarily seeking financing for specific requirements, “but because money is cheap.”
