Bonds sold to finance corporate capital spending on artificial intelligence by technology companies are flooding the bond markets, and the impact is starting to show up in corporate bond indexes.
Prior to the AI buildout, the five biggest companies behind the boom—Alphabet, Amazon, Meta, Microsoft and Oracle—issued minimal amounts of debt, with research from Vanguard showing they combined to issue roughly $35 billion in debt annually between 2020 and 2024.
For 2026, industry estimates for AI-related debt issuance—including chip makers, utilities and others in the wider AI-adjacent theme—range from $300 billion to $570 billion, numbers expected to grow in coming years.
That debt issuance caused the technology sector to show the greatest growth in the $7.5 trillion Bloomberg U.S. Corporate Index in the past 18 months, both on a percentage-weight basis and in net amount outstanding in the index, says Nick Gendron, global head of fixed-income index product management at Bloomberg.
There are two primary corporate bond exchange-traded funds that track the Bloomberg U.S. Corporate Index, according to data from ETF tracker ETFDb, a VettaFi LLC publication. The funds are the State Street SPDR Portfolio Corporate Bond ETF (ticker SPBO), with $2.16 billion in total assets, and the Vanguard Total Corporate Bond ETF (ticker VTC), with $1.63 billion.
As of August, the tech sector’s market value was $805 billion, a 27.8% rise since December 31, 2024, with $891 billion net debt outstanding—a 27.5% rise. The AI-adjacent utilities sector saw a 20.7% increase in market value and a 19.8% rise in net amount outstanding, according to Gendron.
This AI issuance growth is essentially a new asset class for indexes to track, one that comes with correlation across sectors such as semiconductors and utilities, says Brian Barnhurst, head of global credit research at PGIM Fixed Income.
Investors in corporate bond ETFs and mutual funds—who buy funds that benchmark to those indexes—factor the risk of rapid growth into their decisions, he adds, and for now, they are attracted by some of the most favorable corporate bond yields in years.
Not Yet Rivaling Bank Issuance
The tech sector’s rising market value ($1.65 trillion)—and rising share of indexes—remains about half the size of the banking sector, the largest in the Bloomberg Corporate Index. The banking sector’s market-value growth since 2025 lagged both the tech sector and the overall index’s increase, Gendron says, rising 6.1%, well short of the 10.3% rise in the overall corporate index’s market value.
Gendron says Amazon and Oracle issuances lead the growth, by enough that as of August, Amazon’s market value hit 1.4% of the corporate index, ranking it fifth among the 10 largest issuers. Oracle sits at No. 8, with market value equal to 1.3% of the index value.
Amazon’s offerings are among some of the largest in corporate bond sales history, including a $53.8 billion sale split across U.S. dollars and euros. Oracle also made several recent sales, including a $30 billion bond-and-preferred-stock deal.
That issuance turned heads, says Preston Peacock, head of ICE Data Indices, but it is not enough to overwhelm the global corporate and high yield markets. All tech issuance, not just net new issuance, represents about 4.5% of the ICE BofA Global Corporate & High Yield Index, with the face value of the sector just under $900 billion.
“[It is] far from levels that are going to make people fundamentally change how they look at corporate bond market investing and the index makeup,” Peacock says.
Despite the AI issuance growth, Gendron says it barely affects the overall corporate index’s duration, average weighted maturity or yield.
So far, investors have managed to digest the chunky new issuance tranches. Karen Veraa-Perry, BlackRock’s head of U.S. iShares fixed-income strategy, says the mechanics of how the firm manages its processes have not been affected. Even during times of market stress, the very liquid bond ETFs continue to trade with tight bid/ask spreads and track net asset value closely.
There are questions about how tech companies will continue to issue debt, but Peacock says there are other funding options aside from corporate bonds, including securitized debt, additional equity issuance and private debt.
Whether AI-related debt issuance will eventually overtake bank issuance remains to be seen; Peacock says it will be difficult, considering there are several avenues for companies to issue debt related to the data center buildout.
Investor Demand Remains Strong
Fund issuers say that ETF and mutual fund investors do not seem overly worried about the AI issuance changing the shape of indexes.
Rebecca Venter, a senior fixed-income client portfolio manager at Vanguard, says client discussions center on how yields are affected by the broad competition for capital between tech companies, non-tech issuers and U.S. Treasury issuance, rather than about concentration within an index.
Veraa-Perry agrees that the absolute yield levels continue to attract investors. BlackRock’s biggest corporate-bond ETF, iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), with more than $32 billion in assets, sees significant inflows and outflows, as many investors use it for liquidity purposes—enabling them to access corporate bond investment characteristics as they await new bonds issues. The iShares Broad USD Investment Grade Corporate Bond (USIG), with more about $17.85 billion in assets, also has seen strong inflows.
According to Veraa-Perry, BlackRock has fielded questions about AI concentration in the benchmarks. For those who might want to minimize exposure, floating-rate funds could be an option, since few of the tech companies issue that type of debt. Floating-rate funds also do well when the Federal Reserve hikes rates, which it did at last month’s Federal Open Market Committee meeting.
Enthusiasm about AI is widening spreads in the bond market, but the excitement is not overdone, Venter says. According to Vanguard’s credit research analysts, the fundamentals for AI issuers “are the best they’ve seen in their careers,” Venter says. “And many of them have decades-long careers.”
Tags: Artificial Intelligence, bond ETF, Bonds, ETFs and Indexing, fixed income strategies, Portfolio Construction