Key takeaways:
- Capital markets appear to be booming, but non-AI bond and equity issuance is actually down 3%, meaning the entire recovery rests on one unusually capital-intensive investment cycle.
- The five largest global equity raises accounted for 30% of issuance through July versus 8% last year, and while M&A value surged, deal count rose just 6%, a sign that a handful of large AI and infrastructure transactions are doing the work of a broad recovery.
- The capital markets rebound has done little to resolve the $3.8 trillion private equity backlog because strategic mega-deals and primary IPO proceeds do not translate directly into sponsor exits or distributions.
Capital markets are back
After several years of dealmaking in low gear, capital markets have shifted into overdrive. Global debt and equity issuance has reached a combined $4 trillion so far this year, with non-financial bond issuance up 13% year-over-year and equity issuance up nearly 70% (Exhibit 1). Meanwhile, announced M&A value has climbed 48% to $2.4 trillion (Exhibit 2).
The issuance boom is largely a U.S. story
The U.S. is setting the pace of activity: U.S. bond and equity issuance rose 62% year over year to $1.5 trillion, compared with a 3% increase internationally to $2.5 trillion (Exhibit 3). U.S. equity issuance more than doubled to $404 billion, and U.S. bond issuance increased 46% to $1.1 trillion (Exhibit 4). International markets remained open, but the step-up in activity came overwhelmingly from U.S. issuers.
While the headline numbers suggest a broad-based revival in capital markets activity, a closer look reveals a more concentrated story.
Defining the AI ecosystem
We define the AI ecosystem broadly to include technology, communications, data centers, semiconductors, utilities, and electrical infrastructure supporting AI investment. Transactions are classified using Bloomberg industry data and a curated company list applied consistently across issuance and M&A (see the appendix for full methodology).
Financing the AI boom
As companies race to fund the buildout of AI infrastructure and meet soaring capital expenditure needs, capital markets have become a critical source of financing. AI-related issuance nearly doubled to $1.5 trillion and supplied essentially all of the net growth in bond and equity issuance (Exhibits 5 & 6). Global equity issuance rose 69% to $695 billion, but AI-related issuance increased more than fourfold to $394 billion while non-AI issuance declined to $301 billion (Exhibit 5). Global bond issuance increased 13% to $3.3 trillion, led by a 61% rise in AI issuance to $1.1 trillion; issuance outside AI declined to $2.2 trillion (Exhibit 6).
In contrast, combined non-AI bond and equity issuance has declined by 3% so far in 2026 versus the comparable period in 2025 (Exhibits 7 & 8).
A concentrated theme producing concentrated markets
As AI-related financing gains share, deal activity is also becoming more top-heavy. The five largest global equity raises represented 30% of total issuance through July, up from 8% in 2025 (Exhibit 9). Just two record-breaking deals (the SpaceX IPO and the Alphabet secondary equity raise) accounted for roughly $171 billion (25%) of 2026 issuance, and each connects to the AI ecosystem through compute, semiconductors, or infrastructure.1,2
Transaction values are rising faster than transaction counts
M&A shows a parallel pattern. Announced value increased to $2.4 trillion, but deal count rose by only 6%, and the five largest transactions represented 23% of total value (Exhibit 10). Two transactions, SpaceX/xAI (AI) and NextEra/Dominion (power), account for approximately $370 billion of announced value, more than half of the year-over-year increase.3,4 The rise in announced value is being driven more by transaction size than by a generalized acceleration in the number of deals. Large strategic buyers are making transformational bets while ordinary-sized deal activity remains more restrained.
A recovery that hasn’t reached exits
The rebound in equity issuance and M&A hasn’t translated into a meaningful pickup in private equity exits. Deal value is running near records, but PE has largely been left out: its share of M&A fell to 24% in the first half of 2026, well below its 46% average since 2021, and the channels that actually clear portfolios shrank hardest, with 2Q sales to corporates down 63% and sponsor-to-sponsor sales down 57% quarter-over-quarter, the latter to a decade-low count.5 The deals driving the headline numbers, such as SpaceX/xAI and NextEra/Dominion, are strategic buyers acquiring capabilities, not sponsors monetizing holdings. The result is an aging portfolio: a record 33% of PE-owned companies have now been held at least five years, up from 23% in 2023 and rising for a fourth straight year.6
A pipeline that looks like more of the same
The forward calendar offers little reason to expect a broad reopening. It’s dominated by the same handful of AI names, led by Anthropic, which could top SpaceX’s ~$86 billion to become the largest IPO ever, with OpenAI likely slipping to 2027.7 Even in aggregate, the marquee listings expected through 2027 would raise on the order of $100-150 billion, modest against a private equity backlog of roughly 32,000 companies worth ~$3.8 trillion.8 And because the mega-deals are mostly primary capital raised for the companies themselves, the cash actually returned to venture and PE holders is a fraction of the headline proceeds. IPOs have historically been just ~18% of U.S. PE exit value, so a concentrated, AI-heavy pipeline is unlikely to clear the backlog on its own.9
The bottom line
Capital markets have reopened, but the recovery rests on one theme, which ties the outlook for issuance and M&A to the AI capital cycle holding up. Healthy markets help private equity through exits and deployment, yet the payoff so far has been concentrated. It is broader deal flow, not bigger deals, that would actually restore sponsor cash flows.
1. United States Securities and Exchange Commission, Space Exploration Technologies Corp. S-1 Filing, May 20, 2026.
2. Alphabet, Alphabet Announces Upsize and Pricing of $84.75 Billion Equity Capital Raise to Expand AI Infrastructure and Compute, June 2, 2026.
3. SpaceX, xAI Joins SpaceX to Accelerate Humanity’s Future, February 2, 2026.
4. NextEra, NextEra Energy and Dominion Energy to Combine, Creating the World's Largest Regulated Electric Utility Business and North America's Premier Energy Infrastructure Platform Benefiting Customers, May 18, 2026.
5. iCapital, Bloomberg for U.S. M&A data, PitchBook for U.S. PE deal activity, as of July 10, 2026. Data as of June 30, 2026.
6. PitchBook, Q2 2026 US PE Breakdown, July 7, 2026.
7. Wall Street Journal, Oura and Dunkin’ Get Ready to Join IPO Bonanza, August 24, 2026.
8. Bain & Company, Global Private Equity Report 2026, February 23, 2026.
9. PitchBook, 2025 Annual US PE Breakdown, January 14, 2026.
APPENDIX
Tech/Power/AI Methodology: Equity issuance (ECM) and M&A deals are each tagged Tech/Power/AI or not using a shared, rules-based classification applied consistently across both datasets. The label "Tech/Power/AI" — rather than simply "AI" — reflects the fact that power and electrical utilities make up a substantial share (roughly a quarter to over half, depending on the year) of tagged deal value, alongside a smaller set of companies tied more directly to AI infrastructure.
An M&A deal or equity issuance qualifies if Bloomberg's BICS classification codes it as Sector = Technology or Utilities, if its BICS industry subgroup matches a defined list of tech/power-related concepts (e.g., data centers, networking equipment, semiconductor equipment, power generation), or if the company appears on a curated list of ~100 named entities — spanning AI models/software, cloud services, semiconductors, data centers, networking, and power/electrical infrastructure — that are genuinely AI- or power-infrastructure businesses but get filed by Bloomberg under an unrelated sector (e.g., data-center REITs under Real Estate, Vertiv under Industrial); named pharma/biotech companies and known false-positive name matches (e.g., "Francisco Partners" vs. "Cisco") are explicitly excluded. For M&A, a deal counts if either the acquirer or the target qualifies, and a deal is classified as U.S. if either the acquirer or the target is U.S.-domiciled (rather than target-country alone); ECM issuance is classified by the issuer's own country, since it is single-sided by nature.
Bond issuance includes active and matured global corporate bonds issued from January 1, 2022 through July 31, 2026, excluding issuers classified in the Financials sector. Individual issues are limited to an original amount issued of at least $50 million. AI-related bonds are identified using a rules-based review of Bloomberg BICS classifications spanning technology, communications, semiconductors, cloud and data-center infrastructure, networking, electrical equipment, utilities, power generation and other businesses supporting AI development and deployment.
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