Capital Costs Rose as AI Spending Spiked in 2026
High demand for infrastructure funding forced businesses to issue record debt and equity as borrowing costs climbed.
Updated on Sept. 19, 2026 in Corporate Finance
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In Q2 2026, capital expenditure by AA-rated issuers surged 65 percent year-on-year, signaling a massive shift in corporate funding needs. This surge, fueled by aggressive AI infrastructure investment, has contributed to a higher global cost of capital.
Why it matters
The simultaneous expansion of government borrowing for defense and energy alongside private sector AI spending has tightened liquidity. This dynamic forces firms to navigate higher funding costs that may pressure equity valuations if corporate earnings growth fails to keep pace.
AI-related entities accounted for 44 percent of US convertible bond issuance and 25 percent of US investment-grade supply in 2026. Goldman Sachs has raised its US investment-grade issuance forecast by 200 billion USD to a total of 2.3 trillion USD.
The players
Goldman Sachs
A global investment banking firm that provides financial services and market forecasting to institutional and corporate clients.
The details
Companies are tapping debt and equity markets at elevated rates to fund capital-intensive AI infrastructure projects, a trend that has seen aggregate AA-rated capex growth exceed 35 percent for 10 consecutive quarters. This influx of supply arrives as government borrowing for energy security and defense further competes for available capital. Consequently, higher funding costs are emerging as a headwind that may limit valuation expansion across the broader market.
Timeline
In 2022, 30-year bond yields in Germany and Japan neared zero.
In Q2 2026, capital expenditure for AA-rated issuers rose 65 percent year-on-year.
Through year-to-date 2026, US convertible bond issuance reached 135 billion USD.
Market Landscape
The current environment of tightening credit represents a significant departure from the 2022 era when 30-year bond yields in Germany and Japan neared zero. This shift marks a reversal in the global cost of capital, ending a decade-long period of cheap funding.
Operators should anticipate sustained pressure on margins as funding costs stay elevated compared to recent historical norms. Financial teams should stress-test capital projects against these higher borrowing costs to ensure that expected returns remain viable.
The takeaway
The surge in AI-related capital expenditure is a primary driver of higher global bond yields, necessitating a more disciplined approach to debt issuance. Operators should monitor their firm's debt-to-equity ratio and prepare for higher interest expenses on all upcoming capital projects.
Further reading
For a broader look at current funding trends, see our coverage of Corporate Finance.
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