Amazon.com, Inc. (NASDAQ: AMZN) is looking to raise approximately $12 billion through a corporate bond sale aimed at bolstering its artificial intelligence infrastructure. This marks the first U.S. dollar bond issuance by the company in almost three years.
The bond sale is timely as major technology firms are ramping up investments in AI to meet increasing demands. According to estimates, tech companies are projected to spend around $400 billion on AI infrastructure by 2025, highlighting the urgency of capital deployment in this sector.
Amazon”s planned bond offering comes amid a significant rise in debt issuance across the technology landscape. The longest duration bond in this offering, a 40-year bond, is anticipated to price approximately 1.15 percentage points above Treasury rates, indicating solid demand from investors and a strategic approach towards long-term financing.
In comparison, other tech giants are also pursuing substantial debt financing to facilitate their AI initiatives. For instance, Meta Platforms plans a $30 billion bond sale, Oracle is targeting $15 billion, and Verizon is seeking $10 billion to fund its Frontier acquisition. This trend underlines a collective pivot towards securing financial resources to support expansive AI capabilities.
Amazon”s capital expenditures are set to reach $125 billion this year, heavily driven by investments in cloud services and AI infrastructure. This pace of spending positions Amazon among the highest in the tech sector. A recent $38 billion deal with OpenAI is indicative of Amazon”s strategy to enhance its cloud offerings, particularly in AI, as it competes with Microsoft and Google.
The proceeds from the upcoming bond sale are expected to provide Amazon with the flexibility to fund acquisitions, capital expenditures, share buybacks, and other corporate needs, ensuring that the company maintains its competitive position in the evolving tech landscape.
As of the latest trading session, AMZN shares were priced at $231.37. The stock has exhibited mixed performance in recent times, with a year-to-date return of 5.28% compared to the S&P 500″s 13.36%. Over longer periods, Amazon”s stock has shown stronger gains, with a three-year return of 143.51% against the S&P 500″s 68.95%.
In conclusion, Amazon”s anticipated bond issuance reflects its commitment to strengthening its AI capabilities as competition intensifies in the tech industry. By securing this funding, the company aims to enhance its growth across cloud services, e-commerce, and next-generation AI systems.
