Amazon Is Borrowing Another $25 Billion for AI, and Promises This Is the Last Time This Year

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On CNBC this morning, David Faber walked through the bond deal of the day with Jim Cramer, and the numbers do a lot of the talking. Amazon (NASDAQ:AMZN) is tapping the US dollar investment-grade market for $25 billion across multiple tranches, some stretching out to 40 years.

That comes on top of $54 billion Amazon already issued in March 2026, and it feeds a capex plan Andy Jassy has openly pegged at roughly $200 billion for 2026. Amazon has told underwriters it will not come back to the debt market again this year, a deliberate signal about supply management.

Why a Cash-Rich Company Is Borrowing Tens of Billions

Amazon generated $139.5 billion in operating cash flow in 2025 and sits on $101.8 billion in cash. So the reflex question from a retail reader is fair. Why borrow at all? Because the capex line ate almost the entire cash flow. Capex was $131.8 billion in 2025, and $44.2 billion in Q1 2026 alone. Trailing twelve-month free cash flow has collapsed to $1.2 billion, down about 95%, because AI data centers, custom Trainium chips, and the deployment of a million-plus NVIDIA GPUs have to be paid for now, in cash, while the revenue arrives later.

Running negative free cash flow to fund capex here is a deliberate choice. Amazon is voluntarily running the pipe dry to build capacity it has already sold. OpenAI has committed to roughly 2 gigawatts of Trainium capacity beginning in 2027, and Anthropic has locked up to 5 gigawatts. The demand is contracted. The concrete and the silicon are not yet poured.

The “Last Time This Year” Signal, and Why Bondholders Care

Long-term debt has already jumped from $65.6 billion at year-end 2025 to $119.1 billion by the end of Q1 2026. Interest expense followed and climbed to $800 million from $541 million a year earlier. When Amazon tells underwriters this is the last issuance of the year, it is managing supply. Every new tranche in the same name pressures spreads on the existing bonds. Guiding the market to a hard stop protects the buyers of today’s deal from being diluted tomorrow. It also anchors the trade against a rising rate backdrop. The 10-year Treasury is at 4.49%, sitting in the 93rd percentile of its 12-month range. Locking in 40-year money now, before the window narrows, is a treasury-desk decision made in real time.

Capacity is ample. The US investment-grade market is roughly $9 trillion, and demand for high-quality duration has been sturdy. The 10Y-2Y spread is positive at 0.35%, meaning investors are still being paid to extend, and Amazon is one of the few names that can absorb $25 billion in one sitting without indigestion.

The Telecom Parallel, and When Someone Cries Uncle

Faber’s historical rhyme is worth sitting with. Verizon and AT&T were once the largest corporate issuers precisely because they had the largest capex budgets. Fiber, spectrum, towers. The hyperscalers have taken that mantle. Morningstar pegs combined hyperscaler capex at $452.8 billion in 2026, more than four times what the entire US energy sector spends. Amazon alone is projected to outspend all of Big Oil.

Cramer’s read on the psychology, “too risky to not spend,” captures the underwriting logic. If AWS growth re-accelerated to 28%, its fastest in 15 quarters, and the custom chips business is running at a $20 billion-plus run rate with triple-digit growth, then not borrowing is the risky move. The ROI math still holds. It stops holding the moment demand curves bend, and that is the bond covenant every investor is really underwriting. For now, with 62 of 66 analysts bullish and a $312.91 target, the market is treating this as disciplined aggression. Read Amazon’s Q1 8-K and decide whether you agree.

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