Companies are spending exorbitant amounts of money to keep up with the AI arms race. Debts are increasing. Amid the turmoil, Amazon has struck deals to borrow about $17.5 billion from multiple lenders, according to Bloomberg.
The banks behind the loan reportedly include Citigroup, JPMorgan Chase, Wells Fargo, HSBC, and BofA Securities. The deal is characterized as a delayed withdrawal loan, meaning Amazon can withdraw the funds on its own schedule rather than paying the full amount upfront, giving it flexibility in how and when it deploys the funds.
The financing comes just two days after it was reported that Amazon would also raise $14 billion in a Canadian bond sale, bringing the total amount of new funding to about $31.5 billion in about 48 hours.
It’s not clear exactly how Amazon plans to use the new funding. Reuters notes that the new loan will be used for “general corporate purposes.” TechCrunch has reached out to Amazon for more information.
Amazon isn’t alone. Companies are leveraging historic capital spending to fund new AI infrastructure such as chips and data centers. More and more companies are borrowing to fund large-scale AI buildouts. Increasingly, investors and analysts are asking not whether this spending is necessary, but whether the returns justify it.
The scale of the borrowing is astonishing even by Silicon Valley standards. About a week ago, Google’s parent company Alphabet announced it planned to raise $80 billion through a stock sale aimed at “funding investments in a balanced manner while maintaining a strong balance sheet.” Meta also announced plans to raise a record $30 billion from a bond sale.
