Amazon’s $12 Billion Bond Boost for AI Development
Amazon is set to raise approximately $12 billion through a corporate bond sale, marking its first US dollar offering in nearly three years. This move comes as major technology companies increase spending to meet the rapidly growing demands of artificial intelligence, according to a report. A regulatory filing revealed that the company filed for a six-part bond issue earlier in the day, though it did not specify the total size. With the rapid acceleration of AI usage, major technology companies are increasingly resorting to substantial bond sales to fund infrastructure projects that demand tens of billions of dollars. According to the reports, initial price discussions for Amazon’s 40-year bond indicate a premium of approximately 1.15 percentage points over US Treasuries.
Other significant companies are also entering the market. In the previous month, Meta Platforms revealed plans for bond sales amounting to as much as $30 billion, while Oracle is said to be preparing to raise $15 billion. Verizon, the US telecom giant, is reportedly looking to raise $10 billion via bonds to support its $20 billion acquisition of Frontier. Morgan Stanley estimates that companies such as Meta, Amazon, and Alphabet will allocate approximately $400 billion this year towards AI-related infrastructure. According to reports, Amazon is projected to incur capital expenditure of approximately $125 billion in 2024, with expectations of even greater spending in the following year. Amazon may allocate the bond proceeds towards acquisitions, capital expenditures, and share repurchases. The company has also recently disclosed a $38 billion agreement with OpenAI, intended to bolster its cloud operations following a decline in competitiveness against Microsoft and Google.
In the previous month, Meta Platforms announced its intention to secure a minimum of $25 billion via investment-grade bonds. A source has indicated that the sale is expected to rank among the largest US corporate transactions of 2025. This planned offering comes on the heels of a $27 billion private bond deal earlier this month, which facilitated the construction of a Meta data center in Louisiana. The project is primarily under the ownership of Blue Owl Capital Inc, while a significant portion of the debt was originally acquired by PIMCO. Meta’s recent fundraising occurs in the context of a wider financing surge among hyperscalers. Morgan Stanley estimates that companies such as Meta, Microsoft, and Alphabet will invest approximately $3 trillion in data centers by 2028. Approximately fifty percent is anticipated to derive from internal cash flows, while the remaining portion will be sourced from credit markets.
Meta is set to issue bonds in as many as six tranches, with maturities spanning from five to 40 years. According to source, the 40-year tranche is expected to provide a yield of approximately 1.4 percentage points above benchmark Treasuries. Chief Executive Officer Mark Zuckerberg and Chief Financial Officer Susan Li informed analysts that Meta’s substantial investments in AI are enhancing ad targeting and content recommendations, which continue to be fundamental to the company’s business model. Meta reported a 26 per cent increase in third-quarter revenue, reaching $51.2 billion, primarily fueled by advertising, which accounts for approximately 98 per cent of its earnings.
