KEY POINTS
- Amazon (NASDAQ:AMZN) is borrowing at least US$25 billion by selling bonds to help pay for its big AI push.
- It has already borrowed about US$54 billion this year in the US and Europe, plus US$10 billion in Canada.
- The reason: Amazon's spending on buildings and equipment is jumping to US$200 billion in 2026, up from US$131 billion.
- In our view, this is a confident bet, but it turns Amazon into a far more debt-heavy company than investors are used to.
Amazon (NASDAQ:AMZN) is borrowing at least US$25 billion by selling new bonds, its latest step to pay for a giant push into artificial intelligence (AI). At first glance, a big company selling bonds is nothing unusual. But the real story is what it tells us. Amazon is one of the richest, most cash-generating companies in the world, so when even it needs to borrow this much, it shows just how huge the cost of building AI has become. The question for investors is simple: is this a smart, once-in-a-lifetime bet, or a warning that the race to build AI is stretching even the strongest companies?
Why Amazon Is Borrowing Even Though It Makes So Much Cash
Here is what is driving it. Amazon plans to spend around US$200 billion this year on things like data centres, chips and equipment, mostly for AI. That is a big jump from US$131 billion last year, and it is more than the cash Amazon’s own business brings in right now.
So the company is borrowing to cover the gap. This US$25 billion loan comes on top of about US$54 billion in bonds it already sold this year in the US and Europe, plus another US$10 billion in Canada. In our view, this is not a sign of trouble.
Amazon is choosing to borrow cheaply now to invest for the future, which makes sense. But the sheer size is new, and it means investors are backing a company that is spending far more than it earns for now.
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The AI Race Is Changing How Big Tech Pays for Growth
What makes this important is that Amazon is not doing this alone. Google, Meta and Microsoft are all borrowing money or selling shares to fund AI, with total spending across Big Tech set to top US$700 billion this year. The message is clear: the whole industry is shifting from sitting on cash to taking on debt.
This matters for investors because it raises the stakes. When companies pour borrowed money into AI, they are betting it will pay off with strong profits later. If AI demand grows as hoped, these bets look smart. If the payoff comes slowly, the heavy spending and rising debt could drag on profits and cash for years.
The Investor’s Takeaway for AMZN
So what should investors make of it? Amazon is still a top-quality business, and its cloud arm, AWS, is exactly where much of this AI money is going. Helpfully, management also told lenders it does not plan to borrow any more this year after this deal, which limits the near-term debt.
But we believe the bet has become riskier. Amazon’s shares trade at about 29 times earnings, which is not cheap, and the company is expected to burn through cash this year as spending peaks.
The big question is simple: will this US$200 billion bet turn into real profit or just a bigger bill? For long-term believers in Amazon, the plan is reasonable. For the cautious, it makes sense to wait for proof that the AI spending is paying off before buying at today’s price.
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