JPMorgan Projects AI Surge to Fuel $1.81 Trillion in 2026 U.S. Investment-Grade Bond Sales

JPMorgan Chase & Co. has forecast a record $1.81 trillion in U.S. investment-grade bond issuance in 2026, driven by a surge in AI-related capital spending and other market dynamics. The projection exceeds the previous high of $1.76 trillion set in 2020, according to JPMorgan credit strategists Nathaniel Rosenbaum and Eric Beinstein. The firm said technology, media, and telecom sectors would dominate borrowing, with tech companies alone expected to raise $252 billion in 2026, a 61% jump from 2025 levels.

The anticipated growth in debt issuance is supported by a combination of refinancing needs, rising M&A activity, and sustained borrowing demand from AI-focused industries. JPMorgan noted that U.S. companies will need to refinance over $1 trillion in debt maturities and that mergers and acquisitions will also contribute to the debt market's expansion. Additionally, the report highlights that better borrowing rates and a revival in corporate activity have contributed to this year's bond surge.

Technology remains a central theme in the bond market, with the sector projected to account for nearly a quarter of the high-grade bond market in 2026.

Rosenbaum and Beinstein expect media and entertainment borrowing to rise by 38% to $85 billion and telecom borrowing to increase by 25% to $56 billion. Meanwhile, JPMorgan forecasts a 6% decline in borrowing by U.S. banks due to regulatory reforms reducing leverage requirements. The firm also expects net issuance to jump 54% next year to $802 billion, the highest level since 2020.

Drivers of the AI-Driven Bond Boom

The AI boom is not only boosting bond issuance but also reshaping capital market dynamics. JPMorgan strategists Tarek Hamid and his team estimate that AI data center construction will require $1.5 trillion in investment-grade bonds over the next five years. They note that despite strong demand, funding from traditional channels will fall short, creating a $1.4 trillion funding gap. To bridge this, the report suggests that private credit and government funding could play a critical role, as well as innovative capital structures to access broader market segments.

The analysts project that $300 billion in high-grade bonds will be allocated to AI data centers in 2026, representing nearly one-fifth of total issuance in that market. This comes as companies like Meta and Oracle secure massive funding for their AI infrastructure, including a recent $30 billion bond sale by Meta, the largest order book in the high-grade bond market's history. The demand for AI-driven infrastructure is expected to remain strong, limited mainly by physical constraints such as energy and real estate availability.

Risks to the Outlook

While the AI boom is driving bond issuance to record levels, JPMorgan and other Wall Street firms have flagged potential risks. The bank's strategists warn of parallels to the telecom bubble of the late 1990s and early 2000s, where overcapacity led to widespread defaults and valuations collapsed. Despite the current market's enthusiasm, they caution that investor exuberance may be reaching irrational levels, particularly in private debt structures used by hyperscalers to keep AI funding off balance sheets. Data center executives have also expressed concerns about future distress, with more than half of industry professionals in a recent poll indicating worries about potential overbuilding and misallocation of capital. The analysts emphasize that while AI infrastructure represents a "parabolic" growth opportunity, the path forward may not be linear. Spectacular winners may emerge, but they also warn of equally significant losers in a market with high capital intensity and winner-takes-all dynamics.

What This Means for Investors

For investors, the AI-fueled bond market presents both opportunities and challenges. With gross issuance projected to rise 17% in 2026 and net issuance climbing 54%, the bond market is poised for a major expansion. Technology, media, and telecom sectors are expected to be the primary beneficiaries, offering exposure to companies actively building AI infrastructure. However, investors must remain cautious about the risks of overleveraging and structural imbalances in the sector.

JPMorgan's report also highlights the broader implications for the financial ecosystem, as AI-related spending is driving a reacceleration in bond and syndicated loan markets. The firm estimates that the total cost of AI infrastructure could reach $5–7 trillion over the next five years, reshaping traditional financing paradigms. For institutional investors and credit strategists, the challenge will be to identify high-conviction opportunities in a market where demand is outpacing traditional funding mechanisms.