AI companies hungry for cash are rushing into a fast-growing corner of the bond market, issuing convertible bonds at near-record volumes as investors chase exposure to the sector’s stock-price volatility.
So far this year, U.S.-listed companies including CoreWeave and Microchip Technology have issued about $54 billion in convertible bonds, according to Dealogic data going back to 1995. That represents a 43% increase from the same period in 2025 and the highest year-to-date volume since the start of the Covid-19 pandemic.
Convertible bonds pay regular interest but can be converted into shares of the issuing company’s stock if the share price reaches a predetermined level. Investors like that they get the relative stability of bonds along with some of the upside if shares take off.
“Convertibles are growth capital for growth issuers, and I don’t think you can think of a better growth opportunity than AI,” said Joe Wysocki, senior co-portfolio manager at Calamos Investments.
For AI companies, the convertible-debt market provides a way to raise funding at rock-bottom costs, with many paying coupons as low as 0%. Investors are willing to accept such rates because of the volatility of AI shares, which heightens the appeal of the potential stock conversion.
Investors’ ravenous appetite for AI-related assets has pushed the performance of convertible bonds past many traditional benchmarks. The ICE BofA US Convertible index has gained more than 20% this year, outpacing the S&P 500’s 10% rise and the Nasdaq’s 13% gain as of Tuesday’s close.
CoreWeave recently issued $4 billion in convertible bonds carrying a 1.75% interest rate. Nick Robbins, the company’s vice president of corporate development, said that more convertible issuance is likely as AI companies make their stock-market debuts. “High‑growth AI businesses are perfect for the convertible market because the volatility that comes with all that growth makes pricing very attractive to issuers,” Robbins said.
Some companies are paying no interest at all on the bonds. Akamai Technologies, the cybersecurity and cloud-computing company, issued $3.5 billion in zero-coupon convertible senior notes split between 2030 and 2032 maturities. The 2030 notes carry a conversion price of $201.41 per share, a 42.5% premium over Akamai’s $141.34 closing price on May 19. The 2032 notes carry a conversion price of $190.81 per share, a 35% premium.
Ed McGowan, Akamai’s chief financial officer, said the company, a repeat issuer in the convertible-debt market, tapped the market when its stock was at a 26-year high and its share volatility reached a multiyear high. “The convert market has been very good to us,” McGowan said. “And so far every time we’ve gone for capital, it’s been the most efficient, cheapest alternative for us.”
Michael Youngworth, head of global convertibles strategy at BofA Securities, said the current environment — high stock prices, tight credit spreads, and well-supported stock volatility — “benefits convertible bond issuers” and that all three conditions are present today.
The gold rush in convertible debt is not without risks for investors. The market could reverse sharply if investors sour on the AI narrative. Geopolitical shocks or macroeconomic events could widen credit spreads, raising funding costs and sapping demand.
Manoj Shivdasani, investment strategist at GSR Research, pointed to a recent precedent: in 2024, the convertible-debt market was flooded by crypto issuers such as Strategy before issuance fell along with crypto prices. “The risk is we are getting a little overexposed to AI,” Shivdasani said. “But that’s part of the convert market. This market finances high-growth names.”