Amazon launches $12 billion bond sale as AI boom fuels need for capital

That giant sucking sound you hear is the AI boom continuing to pull in capital.

Per Bloomberg, Amazon is launching a six-part bond sale, its first new issue since November 2022.

The firm is aiming to raise $12 billion with a series of maturities ranging from three to 40 years.

Per Bloomberg sources familiar with the matter, the offering is for “general corporate purposes,” but in today’s day and age, that’s basically tantamount to financing ambitious AI investments.

The likes of Meta, Oracle, and Alphabet have recently tapped the market or announced plans to do so. Credit risk modestly starting to creep into the AI trade as issuance explodes has been a contributor to the sharp pullback in speculative stocks, many of which are highly levered to that theme.

“Even boasting some of the strongest balance sheets and highest ratings among corporate issuers, software and services providers’ increased spending and borrowing have widened their bond spreads, with some facing downgrades,” Bloomberg Intelligence analysts Robert Schiffman and Alex Reid wrote. “Though spreads are wider, the risk of significant widening, for most, appears contained.”

In their view, Amazon, Microsoft, Alphabet, and Meta are best positioned, while the picture is less positive for Oracle.