Amazon has joined other tech giants in issuing large-scale corporate bonds to secure funding for AI investments.
This marks Amazon’s first bond issuance in three years.
As uncertainty looms over the timeline and profitability of AI investments, fueling concerns about a potential AI bubble and bearish market sentiment, Amazon’s entry into the bond market is likely to intensify these worries.
The Financial Times (FT) reported on Monday, citing sources, that Amazon launched its bond issuance that day. The company plans to issue approximately 12 billion USD in investment-grade corporate bonds, structured in six tranches.
According to regulatory filings, Goldman Sachs, JP Morgan, and Morgan Stanley are managing the bond issuance.
Amazon stated that the proceeds from the bond issuance will support corporate investments, fund future capital expenditures, and refinance maturing corporate debt.
Amazon’s large-scale bond issuance underscores the escalating competition among tech giants to expand AI data centers, despite ongoing bubble concerns.
While Amazon maintains its leadership in cloud market share through AWS, competitors such as Microsoft’s Azure, Google Cloud, and Oracle are gaining ground. The funds raised from this bond issuance are expected to further expand Amazon’s data center capabilities.
Data centers are crucial AI infrastructure, essential for training and operating AI models. Recently, hyperscale cloud service providers have shifted their strategy, opting to finance data center construction through external funding via bond issuances rather than relying solely on internal capital.
Earlier this month, Alphabet issued 25 billion USD in corporate bonds, while Meta Platforms has issued 30 billion USD worth of bonds since the beginning of the year. Oracle issued 18 billion USD in September.
U.S. companies have issued over 200 billion USD in corporate bonds this year for AI-related infrastructure investments.
JP Morgan forecasted that the surge in corporate bond issuances for AI infrastructure investments will push total corporate bond issuance to 1.8 trillion USD next year. Goldman Sachs reported that last year’s total U.S. corporate bond issuance was approximately 1.4 trillion USD.
Goldman Sachs estimated that corporate bond issuances by big tech companies will account for over 25% of net corporate bond issuance in the U.S. this year.
AWS, the world’s leading hyperscale provider, reported a capital expenditure of 34.2 billion USD in the third quarter, a dramatic 61% increase from the same period last year. This year’s total expenditures have reached 89.9 billion USD.
Leveraging these massive investments, Amazon has doubled its computing capacity since 2022 and projects another doubling by 2027.
This month, Amazon also inked a 38 billion USD cloud services deal with OpenAI, granting the AI company access to Amazon’s Nvidia chip-powered data centers for the next seven years.
