Corporate issuers in the United States are leaning heavily on the convertible bond market, pushing issuance to historically high levels as firms linked to artificial intelligence take center stage. Convertible offerings totaled about $34 billion in the first four months of 2026, more than double the volume in the comparable period a year earlier, according to Bank of America Global Research and Barclays Research. That early-year pace puts the sector on course to eclipse last year’s full-year record of more than $120 billion.
About half of this year’s convertible issuance is associated in some way with AI, highlighting the technology’s role in both corporate financing strategies and investor demand. Companies are deploying proceeds to build and expand data centers, upgrade power infrastructure, scale cloud capacity and to refinance convertibles issued during the pandemic-era issuance boom.
Large, headline transactions
Several sizable deals illustrate the trend. Oracle raised $5 billion through a convertible issue; cloud infrastructure provider CoreWeave issued $4 billion; and Australia-based data center operator IREN Limited sold $2.6 billion of convertibles. Energy and semiconductor names have also been active: NextEra Energy completed a $2.3 billion offering and On Semiconductor issued $1.3 billion.
Analysts say a parallel wave of refinancing is lifting volumes as convertibles sold in 2020-2021 approach the five- to six-year maturities typical for the format. Examples of recent refinancing include Duke Energy’s $1.5 billion deal and a $900 million issue by Microchip Technology.
Why convertibles are attractive now
In a high-rate environment where traditional borrowing can be expensive and fresh equity issuance dilutes existing shareholders, convertibles provide a hybrid route that appeals to issuers focused on heavy capital expenditure. Convertibles pay fixed coupons like conventional debt but include the option to be converted into equity if the issuer’s share price exceeds a predetermined conversion level. That conversion feature embeds an equity call option, whose value rises with equity volatility or larger swings in a company’s stock.
Because investors gain potential upside via the conversion option, issuers can price convertibles at lower borrowing rates than straight debt. One illustrative transaction involved Tempus AI, a health technology company using AI to analyze clinical and genomic data, which raised $400 million through a six-year convertible that carries zero coupon and zero principal increase at maturity. The bonds convert into shares if the stock reaches $69.26, roughly 40% above the price when the issue was sold earlier in May.
Convertibles’ combination of fixed-income characteristics and embedded equity optionality has sustained investor interest even as benchmark 10-year U.S. Treasury yields sit at a 16-month high, elevating borrowing costs across fixed-income markets.
Who is buying and where demand is concentrated
Hedge funds and large asset managers dominate the pool of convertible buyers, attracted to the relative value opportunities that the implied volatility in convertibles can present. Venu Krishna, managing director and head of U.S. equity strategy at Barclays, notes that equity optionality is especially appealing for institutional investors looking at AI-linked companies, where upside potential can be significant even when credit fundamentals are weak.
Long-only investors have been active as well, drawn in part by exposure to semiconductors - a segment described as the hottest part of the market right now, driven by AI capital spending, Krishna said. That broadened demand has encouraged a wider set of issuers, including names with riskier profiles than the established leaders in AI expansion.
One example of a more speculative entry to the market is WhiteFiber, which in January sold a five-year convertible to raise $230 million largely intended for data center expansion. The company, which listed in August 2025, reported a negative forward price-to-earnings ratio of about 36 and an enterprise value near 19 times forward EBITDA, according to LSEG. Those metrics indicate investors are pricing in substantial growth expectations. WhiteFiber’s shares have risen nearly 60% so far in 2026.
Market commentary from issuers and intermediaries
Market participants point to capital projects, and in particular AI-related capex, as a driving reason companies are tapping the convert market now. "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.
Youngworth added that overall market performance and improved demand have allowed corporates to access the convert space on favorable terms. "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," he said, noting that some issuers are returning to the market not solely from urgent funding needs but because capital is comparatively cheap.
Investor strategies and sector effects
Convertible structures are enabling companies making sizable investments in AI-related infrastructure to pursue funding with less immediate dilution than equity and at lower coupon costs than straight debt. For investors, these instruments provide a way to capture upside from AI-driven equity appreciation while retaining fixed-income exposure. The activity is most visible in sectors tied to AI deployment - data centers, power utilities supporting that infrastructure, cloud firms and chipmakers - where capital intensity and future growth expectations are shaping both issuance and investor allocations.
Summary
Issuance of U.S. convertible bonds has accelerated to about $34 billion through the first four months of 2026, more than doubling year-ago volumes, with roughly half linked to AI. Corporates are using convertibles to finance data centers, power and cloud expansion and to refinance pandemic-era convertibles coming due. Hedge funds and large asset managers lead demand, while long-only investors are seeking semiconductor exposure tied to AI capex.