JPMorgan Chase has highlighted that the volume of bonds tied to artificial intelligence (AI) has surged to $1.2 trillion, propelling AI-related bonds to the forefront as the largest sector within the investment-grade market. The share of AI companies in the U.S. investment-grade bond market has jumped from 11.5% in 2020 to 14%, now eclipsing the U.S. banking sector. Among technology sectors, 75 companies are deeply intertwined with AI, and these firms are active bond issuers. Given the abundant cash reserves and low net debt ratios characteristic of tech companies, the spreads on their AI-related bonds are 10 basis points tighter compared to the overall JULI index. While analysts argue that the concerns of some credit investors over the surge in AI stocks lack fundamental merit, a sell-off in AI-related equities could still ripple through to the credit market. Risks will materialize if companies deploy substantial cash for capital expenditures or mergers and acquisitions before servicing their debt obligations. Hence, it's advisable to selectively take short positions on credit default swaps within cross-asset portfolios as a hedging tactic against tail risks.