Amazon, the e-commerce giant, is looking to borrow around $12 billion from the corporate bond market. This move marks their first U.S. dollar bond sale in about three years and comes as big technology companies ramp up spending to compete in the artificial intelligence (AI) race.
Earlier today, Amazon filed for a bond sale split into six parts, though they didn’t specify the total amount initially. As AI demand grows, major tech firms are increasingly using big debt sales to finance massive infrastructure expansions that can cost tens of billions of dollars.
Sources familiar with the deal said that early talks on the longest part of the bond sale, a 40-year bond, suggest it will yield about 1.15 percentage points more than U.S. Treasury bonds.
This isn’t an isolated event. Last month, Meta Platforms announced its largest-ever bond sale, aiming to raise $30 billion. Cloud software maker Oracle is also reportedly planning to raise $15 billion through bond sales. Even U.S. wireless provider Verizon is reportedly seeking to raise about $10 billion to help fund its $20 billion deal for Frontier.
According to Morgan Stanley estimates, major tech companies, including Meta, Amazon, and Alphabet, are expected to spend a staggering $400 billion on AI infrastructure this year alone. Amazon itself has been increasing its AI investments, with its capital spending expected to hit around $125 billion this year and even more next year.
Amazon can use the proceeds from this bond offering for various purposes, including acquiring other companies, funding capital projects, or repurchasing its own shares. The company recently announced a $38 billion deal with OpenAI, which significantly boosted its cloud computing division after it had fallen behind competitors like Microsoft and Google. This bond sale will help Amazon continue to fuel its ambitious plans in the fast-evolving world of artificial intelligence.
