Amazon's Free Cash Flow Fell From $25.9B to $1.2B on AI Spending — Now It's Raising $25B in Bonds

Amazon tapped the US investment grade bond market on Tuesday, launching a multi-tranche senior unsecured note offering. The move serves as a massive capital preservation and liquidity drive to support the company's aggressive artificial intelligence infrastructure build out.

Inside the Deal: Size, Maturities, and Pricing Structures

Amazon launched the jumbo offering seeking to raise at least 25 billion dollars, though final sizes can scale up depending on books closing late today. The transaction is structured across up to eight distinct tranches to attract a broad base of institutional asset managers.

The deal includes both fixed rate senior notes and a floating rate series benchmarked against Compounded SOFR (Secured Overnight Financing Rate), which will reset quarterly. Maturities are highly diversified across the yield curve, ranging from short term 3 year notes to an ultra long 40 year tranche maturing in 2066. The issuance is being led by a consortium of major financial institutions, including Barclays, Goldman Sachs, JPMorgan Chase, and Morgan Stanley.

Early book building indications show typical high grade tech hyperscaler demand. Initial pricing indications for the longest 40 year tranche started at around plus 145 basis points over US Treasuries. Heavy bidding is expected to compress spreads by 15 to 20 basis points by the final print. This follows a historical trend for Amazon this year. The company actively scoured global markets just last month, completing a record breaking 14 billion Canadian dollar issuance that drew over two times oversubscription.

Capital Allocation and the Need for Debt

Formally filed under general corporate purposes, the prospectus specifically outlines that the proceeds will fund massive capital expenditures, specifically data centers, custom Trainium chips, and NVIDIA GPU deployments. The capital will also be used for the repayment of existing short term debt or maturing notes, alongside potential share repurchases, working capital, and acquisitions.

Strictly from a current cash flow to obligations standpoint, Amazon does not need the liquidity. However, looking at the forward capital expenditure run rate, the capital structure shift makes structural sense.

Amazon's trailing twelve month operating cash flow sits at a strong 148.5 billion dollars. However, its trailing twelve month free cash flow plummeted to 1.2 billion dollars, down from 25.9 billion dollars in the prior period. This cash burn is entirely driven by a massive 59.3 billion dollar year over year surge in capital expenditures dedicated entirely to generative artificial intelligence infrastructure. Given that Amazon's internal projected capital expenditure run rate is tracking near 200 billion dollars for the full year, the company is proactively utilizing the debt markets to preserve its cash buffer rather than draining working capital.

Current Debt Load and Balance Sheet Impact

Amazon's total debt escalated significantly to 119.1 billion dollars as of the first quarter, up sequentially from 65.6 billion dollars in the fourth quarter of 2025. This reflects persistent borrowing across euros, Swiss francs, and Canadian dollars over the last 18 months.

Assuming a clean 25 billion dollar cash addition from this latest transaction, total gross debt will push toward the 144 billion dollar mark.

Despite the nominal jump, credit risk remains exceptionally well insulated. Credit rating agency Fitch assigned a AA minus rating to this proposed issuance, noting that Amazon's EBITDAR leverage remains safely well below 2.5 times. Because the company's EBITDA generation is scaling rapidly alongside Amazon Web Services growth, operating income rose to 23.9 billion dollars in the first quarter alone. Consequently, leverage ratios will remain clean, allowing Amazon to comfortably maintain its investment grade profile.