Amazon Lines Up an $80 Billion Hardware-Backed Loan Facility as AI Spending Commitments Balloon to $883 Billion

Amazon has set up supplier financing arrangements that let it borrow as much as $80 billion against the value of the hardware it purchases, according to a quarterly filing disclosed after the company reported third-quarter earnings on Thursday. It is the clearest sign yet that even the deepest pockets in the AI buildout are reaching for structured credit to keep the data center boom moving.

The secured facility can be tapped at Amazon's discretion from the beginning of 2027 through the third quarter of 2028, with borrowings carrying five-year terms from each drawdown date. Lenders receive collateral rights over some of the assets purchased in connection with the arrangement — effectively a car-loan structure applied to servers and chips. The filing does not specify which assets qualify, and an Amazon spokesperson declined to comment.

That marks a departure for a company that has until now funded its infrastructure spree the old-fashioned way: cash from its cloud-computing and retail operations, plus the largest corporate bond sales in its history. Amazon had largely avoided the creative funding structures embraced by rivals, including joint ventures with investment groups to co-finance data centers and SPV-style deals that lease chips purchased by other entities — arrangements that often centered on Nvidia accelerators, the single most expensive component of new AI facilities.

The balance-sheet pressure behind the move is stark. Amazon's total spending commitments — a bucket that includes debt and interest, leases not yet commenced, and obligations to acquire property and equipment — ballooned to $883 billion at the end of September, up 36 percent from just three months earlier and more than double the level of a year before. Heavy capital outlays drove free cash flow to a negative $42.4 billion over the twelve months ended September 30, and the company guided capital spending higher than analysts expected.

Amazon Web Services chief executive Matt Garman defended the approach in a Bloomberg Television interview 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, adding that Amazon is working with partners to "figure out how we can balance some of those cash flows as we're really ramping up aggressively."

Investors are watching the financing mix as closely as the growth rates. AWS grew 39 percent to $45.98 billion in the quarter — a five-year high for the cloud unit — yet the shares slipped about 2 percent at midday Friday as markets digested what the spending trajectory means for future cash returns. The worry is no longer whether demand exists, but who ultimately carries the cost of capacity that takes years to monetize.

The facility also signals a new phase in AI infrastructure finance: hardware itself is becoming loan collateral at massive scale. If Amazon — which generates tens of billions in operating cash flow — is using vendor-style secured debt to smooth its capex curve, smaller AI cloud providers with weaker balance sheets will face even steeper financing costs. Expect rivals to copy the structure, and expect credit analysts to start asking harder questions about what, exactly, is backing the boom.