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

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

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

This initiative comes as Amazon's capital spending on AI and data centers is by fiscal year 2026, according to analysts at JPMorgan. The company's yearly investment in AI and data center infrastructure is already , 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 , 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

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

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

. For , 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" .

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