Amazon Will Borrow Up to $80 Billion Against the AI Hardware It Buys as Free Cash Flow Turns Negative

Amazon has found a new way to pay for its AI spending: pledging the hardware itself. In its quarterly filing, the company disclosed a secured loan facility of up to about $80 billion for purchases of technology infrastructure, and it will give lenders a security interest in certain assets it buys.

The move marks a shift for the biggest name in cloud computing. Amazon had relied on bond sales and on cash from its cloud and retail businesses, and it had steered clear of the structures some competitors adopted, such as partnering with investors to co-finance data centers or renting chips that third parties own.

The cash picture has since turned. Free cash flow was a $42.4 billion outflow for the 12 months ended September 30, against an inflow of $14.8 billion a year earlier.

How the loan works

The draw window opens in the first quarter of 2027 and closes in the third quarter of 2028. The final amount will vary with the extent and timing of purchase orders and with pricing terms, so $80 billion is a ceiling rather than a fixed sum.

Rates are variable, and each draw matures five years after it is made. Amounts outstanding will count as long-term debt. A spokesperson declined to say which assets are covered.

The numbers behind it

Cash capital spending reached $75.9 billion in the third quarter and $172.2 billion over the first nine months of 2026. Amazon still expects about $220 billion for the full year, a target it raised from $200 billion last quarter, and it expects a meaningful increase in 2027, mainly for technology infrastructure.

The balance sheet is already showing the strain. Long-term debt stood at $173.1 billion at the end of September, up from $65.6 billion at the end of 2025, so it has nearly tripled in nine months. Total principal contractual commitments hit $883.6 billion, up 36% from the prior quarter.

None of that comes from a weak business. AWS sales rose 39% to $46.0 billion in the third quarter. Demand is the reason Amazon gives for spending at this pace.

"As big as possible"

AWS CEO Matt Garman made that case on Bloomberg Television on Friday. "When we see such a really large opportunity in front of us, we're looking for ways to also responsibly fund that so that we can go as big as possible for our customers," he said.

He said Amazon is working with partners to "figure out how we can balance some of those cash flows as we're really ramping up aggressively." The stock slipped about 2% by midday Friday.

Amazon is not alone in borrowing against the chip boom. SpaceX just signed a binding commitment for about $40 billion of GPU financing with an Apollo-managed entity, while Elon Musk warned that debt markets have almost entirely shut out companies without substantial revenue beyond AI data centers.

Amazon has that revenue, which is why it can get a deal like this done. It also now owes more, has committed to more and is burning cash to do it, with the first draw on the new facility still months away.

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