Portfolio Manager Insights

Investing in attractive new AI corporate bond issuance

A recent, massive borrowing spree to finance AI-related expansion has had a meaningful influence on the corporate credit market so far in 2026, says Fidelity’s Jay Small.

By: Jay Small
Updated: 8/17/2026
  • In recent months, several high-profile mega-cap companies have floated corporate bonds in a rapid escalation of borrowing, according to Fidelity Portfolio Manager Jay Small, as they seek to fund the digital infrastructure underpinning their ambitious and costly AI expansion plans through new-issue debt offerings.
  • “It was like a sea change for Oracle, Meta Platforms, Amazon.com and Alphabet, as the companies brought some of the largest corporate bond deals on record to market,” says Small, who co-manages Fidelity Advisor® Corporate Bond Fund with Steven Rolecek and Ben Tarlow. “With credit spreads historically tight, these sizable issues came at unexpectedly attractive pricing and had a significant impact on valuations across the high-quality investment-grade-debt market.”
  • The credit-focused bond strategy targets areas where the co-managers believe they can consistently add value, including security selection and opportunistic trading, supported by their views on various industry groups.
  • Small explains that Facebook parent Meta, cloud-computing and e-commerce giant Amazon, and Google parent Alphabet are all highly rated issuers, but what stood out to him and his colleagues was that these bonds were offered with unusually large concessions, or additional yield spread to encourage participation, despite the issuers’ solid credit ratings.
  • “High-quality issuers typically offer minimal concessions, so the pricing on this new debt was surprising,” he says.
  • The fund participated in all these new issues because of the attractive terms that were offered, according to Small. The co-managers also identified attractive relative value in some private transactions supporting data-center construction, including a recently issued deal from Hut 8, among others.
  • Small and his co-managers expect AI-related companies to continue issuing new debt to fund their ambitious capital expenditure plans. “We believe the bonds issued by these and other highly rated issuers in this group could offer attractive risk-adjusted returns over time,” he says, while acknowledging that it may take some time for the market to absorb the significant amount of new issuance already completed. 
  • “Timing and issuer selection will be important for generating outperformance, as each deal will have its own drivers,” Small says. 
  • The recent bonds issued by these hyperscalers have featured longer maturities with attractive spreads, particularly in a long-dated market where spreads remain tight and valuations are generally less compelling, he adds. 
  • “While we are still only about halfway through 2026, we could eventually see increased issuance of bonds with maturities of 20 years or longer, driven by the AI trend, marking a notable shift from recent years,” contends Small. “Led by pricing dynamics among AI-related issuers, we’re seeing value in long-maturity bonds for the first time in quite a while.”

    Securities mentioned were fund investments as of June 30, 2026.
 
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