TLDR
- Amazon is raising approximately $12 billion through a corporate bond sale, its first in US dollars in three years.
- The debt offering includes up to six parts, with the longest 40-year bond offering a premium of about 1.15 percentage points above Treasuries.
- Proceeds will fund acquisitions, capital expenditures, and share buybacks as Amazon expands its AI infrastructure.
- Amazon’s capital expenditures jumped 61% to $34.2 billion in the third quarter as the company invests heavily in data centers and AI chips.
- This follows major bond sales by other tech giants including Alphabet’s $25 billion, Meta’s $30 billion, and Oracle’s $18 billion offerings this year.
Amazon is heading back to the bond market. The e-commerce and cloud computing giant filed to raise about $12 billion through a corporate bond sale on Monday.
This marks Amazon’s first US dollar debt offering in roughly three years. The company is selling investment-grade bonds in up to six parts.
The longest portion of the deal is a 40-year bond. Initial price discussions for this segment show a premium of approximately 1.15 percentage points above Treasury rates.
Goldman Sachs, JPMorgan Chase, and Morgan Stanley are managing the bond sale. The banks will help structure and sell the debt to investors.
Amazon plans to use the money for several purposes. The proceeds may fund acquisitions, capital expenditures, and share buybacks.
Tech Giants Racing to Fund AI Infrastructure
The bond sale comes as technology companies compete to build out artificial intelligence capabilities. Amazon’s move follows similar large-scale debt offerings from its peers.
Alphabet sold $25 billion in bonds earlier this month across US and European markets. Meta Platforms raised $30 billion in October, making it the largest corporate bond offering of 2024.
Oracle also joined the trend, selling $18 billion in high-grade bonds in September. These tech companies are fueling record-breaking issuance levels.
Global bond issuance has exceeded $6 trillion this year. JPMorgan Chase projects US high-grade market issuance will hit a record $1.81 trillion next year, driven partly by AI investments.
Amazon’s Growing AI Spending
Amazon operates the world’s largest cloud computing business. This infrastructure is essential for running AI systems that require massive processing power.
The company has been pouring money into data centers and specialized chips. These investments support AI models that can generate text, create images, and automate tasks.
Amazon’s capital spending rose 61% to $34.2 billion in the third quarter. The increase reflects the company’s push to expand its computing capacity.
The power capacity of Amazon’s data center fleet has doubled since 2022. CEO Andy Jassy expects it to double again by 2027.
Earlier this month, Amazon Web Services signed a $38 billion deal with OpenAI. The seven-year agreement provides OpenAI access to hundreds of thousands of Nvidia graphics processing units.
Amazon’s stock was trading down 1.39% at $231.42 as of Monday morning. The bond sale was announced during regular trading hours.
The company last tapped the US dollar bond market approximately three years ago. Market conditions and low interest rates at that time made it an attractive option for raising capital.
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