Amazon raises $25B in bonds as investors bid $62B for debt

Amazon's $25 billion bond sale drew $62 billion in orders, giving the company access to cheap long-term capital for AI infrastructure.

Amazon sold $25 billion of bonds across eight tranches Wednesday in a deal that drew $62 billion in demand, a 2.48 times oversubscription that gives the company 40-year money as its AI-driven capital spending approaches $200 billion. The 10-year Treasury yield at 4.55 percent, in the 94th percentile of the past 12 months, made the timing advantageous for a borrower with 35.17 times interest coverage.

"The bond market is effectively pre-funding data centers that already have contracted tenants," said Tom Brennan, an M&A and capital markets analyst. "Amazon's 35 times interest coverage means it can service this debt even if AWS growth slows."

The eight tranches mature from 2029 to 2066, with institutional buyers submitting $62 billion in orders for the $25 billion offering. Amazon holds $101.82 billion of cash on its balance sheet, meaning the debt raise preserves liquidity for acquisitions, chip design, and other strategic investments. The company's debt-to-assets ratio improved to 18.7 percent in 2025 from 30.3 percent in 2022, even as its asset base doubled over the same period.

Why the Capex Is Already Backed by Revenue

The roughly $200 billion 2026 capital expenditure plan funds physical data center capacity supported by AWS's $364 billion commercial backlog. AWS grew 28 percent year over year in the first quarter, the fastest pace in 15 quarters, at a 37.7 percent operating margin. Anthropic is contracted for up to 5 gigawatts of Trainium capacity, while OpenAI committed roughly 2 gigawatts starting 2027. Project Rainier is deploying more than 500,000 Trainium2 chips. Amazon's chips business already runs at a $20 billion annual revenue rate, growing triple digits.

Operating cash flow reached $139.51 billion in 2025 against $131.82 billion of capital expenditure. Management framed this as the final debt tap of the year, removing an overhang that had weighed on the stock. Once capital spending intensity normalizes, free cash flow is expected to snap back from the current depressed level.

The Risk Embedded in the Bet

Free cash flow over the trailing 12 months collapsed 95 percent to $1.2 billion as property and equipment purchases jumped $59.3 billion year over year. If AWS demand wavers, the capital spending could look excessive. But Amazon's first-quarter earnings per share of $2.78 beat the $1.73 consensus by 60.69 percent, its fifth consecutive beat. North America retail margin expanded to 7.9 percent from 6.3 percent, and international operating income grew 40 percent. Advertising revenue crossed $70 billion on a trailing basis, growing 24 percent.

The last time Amazon tapped bond markets at this scale was during its 2020 debt raise, which preceded a period of accelerated AWS investment and margin expansion. The current deal mirrors that playbook: debt funds infrastructure, cash stays weaponized, and the $314.35 average analyst price target implies room for the stock to close the gap from current levels.

This article is for informational purposes only and does not constitute investment advice.