Cash-Heavy Amazon Takes on $12B in Debt: AI Competition Drives Tech Titans to Borrow

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Cash-Heavy Amazon Takes on $12B in Debt: AI Competition Drives Tech Titans to Borrow

Bitget-RWA2025/11/17 15:54

By:Bitget-RWA

- Amazon plans to raise $12B via bonds to fund AI/data center expansion, its first major issuance since 2021. - JPMorgan projects AI-related capex will hit $150B by 2026, straining cash flow despite $84B in reserves. - Tech giants increasingly rely on debt financing as AI investments outpace organic cash generation. - JPMorgan forecasts $1.5T in new tech bonds over five years, signaling a "generational shift" in corporate finance.

Amazon.com Inc. (NASDAQ:AMZN) is set to secure around $12 billion through a corporate bond sale in the United States,

as reported by Bloomberg News

. Earlier this week, the e-commerce and cloud services leader submitted plans for a six-tranche bond issuance without specifying the amount, indicating a strategic pivot as it looks to support its rapid growth in artificial intelligence (AI) and data center capabilities

as per Reuters

. This would be Amazon's first significant bond sale since 2021, when it raised $18.5 billion to help fund its MGM acquisition

according to Benzinga

Cash-Heavy Amazon Takes on $12B in Debt: AI Competition Drives Tech Titans to Borrow image 0

This initiative comes as Amazon's capital spending on AI and data centers is

expected to climb to $150 billion

by fiscal year 2026, according to analysts at JPMorgan. The company's yearly investment in AI and data center infrastructure is already

approaching $78 billion

, fueled by spending on GPUs, networking, and energy systems to keep up with soaring demand for cloud and AI solutions. JPMorgan projects that the tech industry's total AI-related capital expenditures will

hit $450 billion per year

, far surpassing natural cash generation and pushing firms to increasingly depend on borrowing.

Although Amazon holds a strong financial position with $84 billion in cash and marketable securities against $58 billion in liabilities, the heavy investment required for its AI strategy is putting strain on its balance sheet

according to JPMorgan analyst Erica Spear

. "Persistently high capital spending is starting to squeeze free cash flow (FCF) conversion," observed JPMorgan analyst Erica Spear, emphasizing the rising necessity for outside capital to maintain momentum

as noted by Benzinga

. Amazon is following the lead of companies like Meta Platforms Inc. (NASDAQ:META) and Oracle Corp. (NYSE:ORCL), which have

issued billions in bonds this year alone

This bond sale highlights a larger movement in corporate finance, with technology companies increasingly relying on debt to drive innovation. JPMorgan anticipates that major tech firms will issue $1.5 trillion in new investment-grade bonds over the coming five years, marking what it calls a "generational shift" in Silicon Valley's approach to funding growth

according to Benzinga

. For

Amazon

, this step is not a sign of financial weakness but rather an acknowledgment of the immense capital required in the AI race. As one analyst remarked, "When even companies with substantial cash reserves start borrowing, it's evident that the AI surge is not only transforming technology but also redefining the landscape of corporate finance"

as reported by Benzinga

---

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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