Amazon has made history with the largest corporate bond sale ever recorded, raising approximately $53.8 billion. This massive fundraising, spanning 19 tranches and two currencies, included a $37 billion US dollar component and a €14.5 billion ($17 billion) euro component. This surpasses Verizon Communications' previous record of $49 billion from 2013 and is notably the biggest US corporate bond sale not tied to an acquisition. Initially, the US offering was guided at $25 billion to $30 billion but was increased due to high demand, attracting about $158 billion-equivalent in orders across both legs, with $126 billion of peak demand for the US bonds alone.
The primary driver for this substantial debt issuance is Amazon's aggressive investment in artificial intelligence. The company plans to spend an estimated $200 billion this year on building data centers, developing its own chips, and training its Nova AI model, which marks the largest corporate capital expenditure program ever seen. Furthermore, Amazon intends to invest as much as $50 billion in OpenAI, a company that serves as both a competitor and a major client for its Amazon Web Services (AWS) business.
This funding strategy reflects a shift for Amazon, which had previously focused on paying down debt. The current deal increases its total borrowings to $122 billion, up from $58 billion at the end of October. This significant spending is expected to strain the company's finances, potentially pushing its free cash flow into negative territory. Other tech giants, such as Alphabet Inc., Meta Platforms Inc., and Oracle Corp., are similarly leveraging bond markets to finance their AI ambitions, with a collective forecast of capital expenditures around $650 billion in 2026 for these hyperscalers. The bond sale happened despite market volatility, including a temporary closure of the US bond market due to geopolitical tensions in the Middle East, demonstrating strong investor confidence in tech companies like Amazon and their AI endeavors.
