Borrowing from Wall Street to London! Amazon.com, Inc. (AMZN.US) issues pound bonds for the first time, rebutting the AI bubble with diversified financing needs.

Amazon.com, Inc. (AMZN.US), the American e-commerce and cloud computing giant, has appointed banks to arrange for the issuance of its first pound-denominated bonds, with the transaction expected to officially launch as early as Wednesday. Currently, global hyperscale cloud service providers are actively raising funds worldwide to finance artificial intelligence infrastructure development. An unprecedented wave of "AI credit" is shifting the financing landscape for AI computing infrastructure of American tech giants from the dollar market to global pools of capital. Earlier, Amazon.com, Inc. raised approximately 14.5 billion through an eight-tranche bond issuance in March and is now preparing for its first pound-denominated bond issuance. Major companies like Alphabet Inc. Class C and Amazon.com, Inc. have been establishing a durable and diversified market financing structure in multiple sovereign currencies to mitigate the negative impacts brought about by fears of an AI bubble, as well as to prevent the depletion of liquidity backup resources that support AI computing infrastructure expenditures. Alphabet Inc. Class C's parent company, Alphabet, completed its first issuance of corporate bonds denominated in Australian dollars in August. In the same month, the company also completed the issuance of $25 billion in bonds in the dollar market, and in 2026, it issued corporate bonds in Swiss francs, pounds, euros, Canadian dollars, and yen. Recently, the company also raised nearly $85 billion through an additional stock offering. Alongside other American tech giants such as Facebooks parent company Meta Platforms, Oracle Corporation, Amazon.com, Inc., and Microsoft Corporation, these technology behemoths have raised hundreds of billions of dollars in USD and other sovereign currencies this year to support their ambitious artificial intelligence goals. While the significant investments in AI by large tech companies are helping push stock market technology shares related to AI computing back to historical highs, the backdrop of massive corporate bond issuance, along with higher corporate bond yields and the long-term yield curve of U.S. Treasuries being 10 years and longer, has intensified debates in the market regarding whether these companies can generate sufficient profits from such vast investments in AI computing infrastructure. The risk associated with the "AI bubble" bursting has further escalated due to the continuous growth in corporate bond issuance scale and yields, as well as expectations of defaults. Financing landscape expands again! Amazon.com, Inc. strikes the first blow in the pound bond market. Alphabets parent company, Alphabet, and Amazon.com, Inc. are leveraging their AA credit rating quality, strong cash flow from search engines, e-commerce, and cloud computing businesses, alongside robust revenue growth from AI computing resources sales/rentals, to transform into a source of low-cost long-term capital globally. By diversifying currency and investor bases, they aim to avoid saturating the single-dollar bond market with the massive supply related to AI. The latest developments in the AI credit market can indeed significantly diminish the panic surrounding the AI bubble/unSustainability of financing related to Alphabet, but they cannot completely dispel the controversy surrounding the entire AI industry. According to a person familiar with the matter who requested anonymity due to the information being undisclosed, the company plans to issue multiple corporate bonds with maturities ranging from 3 to 19 years, with JPMorgan Chase, Barclays, HSBC HOLDINGS, and National Westminster Bank Group arranging the transaction. This online retail giant and the world's largest cloud computing powerhouse initially issued euro-denominated bonds in March, setting a historical record for euro corporate bond issuance; subsequently, the company also entered the Swiss franc bond market, issuing an unprecedented six tranches of bonds. Overall, Amazon.com, Inc. and Alphabet Inc. Class C's parent company, Alphabet, have together become the largest bond issuers among hyperscale cloud service providers by 2026, with Amazon.com, Inc. issuing securities worth over $92 billion, slightly exceeding that of Alphabet Inc. Class C's parent company. Amazon.com, Inc.'s total debt is also the highest among hyperscale cloud service providers, with Microsoft Corporation, planning based on cloud market share, ranking second globally behind Amazon.com, Inc. However, Amazon.com, Inc.'s debt scale is nearly twice that of Microsoft Corporation. Amazon.com, Inc. plans an unprecedented $220 billion in capital expenditures this year, with CEO Andy Jassy stating that most will be used for the expansion of AI-related computing infrastructure resources. Given the unprecedented scale and speed of such bond issuances, financial market investors have shown increasing signs of fatigue in the pricing trajectory of tech giants in the stock and bond markets throughout this year. The recent issuances seem to have seen a weakening demand for debt investments, compounded by the widening spreads during issuance pricing as long-term U.S. Treasury yields rise, thus driving up debt financing costs. Global capital flows into the AI credit market, with the booming global AI computing investment facing a test of yields. Amazon.com, Inc. raised 14.5 billion through eight tranches of bonds in March and is now preparing for the pound debut. A study released by the European Central Bank on August 31 indicates that the euro bond stock for hyperscale cloud service providers is approximately 40 billion, and large American tech companies have accounted for nearly 10% of the euro-denominated non-financial corporate bonds issued this year. Cross-currency financing can widen the investor base, disperse concentrated issuance pressure, and match overseas expenditures, while also diversifying currency and investor bases to avoid the bursting of the AI bubble to the greatest extent possible; however, the tangible cost advantages depend on bond coupon rates, maturities, as well as exchange rate hedging and cross-currency swap costs. Alphabet's diversified currency financing practice is particularly prominent: in February, it issued 5.5 billion in bonds, including a 1 billion bond with a coupon of 6.125% maturing in 2126; in August, it entered the Australian dollar bond market for the first time, raising AU$5.5 billion (approximately $3.89 billion) with subscriptions exceeding AU$18 billion, which is over 3.27 times the issuance amount, with a 20-year bond coupon rate of 6.9%. From ultra-long-term funds in the UK to local currency bond investors in Australia, the expansion of AI infrastructure is absorbing savings from different markets. Financing tools are also expanding. Oracle Corporation announced plans in February to raise $45 billion to $50 billion by 2026, aiming to finance approximately half through debt and half through equity for new capacity construction for contracted cloud computing demand. In August, NVIDIA Corporation announced the establishment of an independent computing financing platform in partnership with Apollo, BlackRock, Inc., and Blackstone, planning to gradually mobilize over $500 billion in third-party capital, with related arrangements pending final agreements. These developments indicate that the construction of AI computing infrastructure is simultaneously linking tech companies' balance sheets, public bond markets, and institutional capital, where financing capability has become a crucial condition for the pace of expansion. However, the approaching 5% yield on 10-year U.S. Treasury bonds seems to continuously test the strong financing pressures of AI capital expenditures. With U.S. federal debt surpassing $40 trillion and the yield on 10-year U.S. Treasuries rising to around 4.8%, Ruchir Sharma, chairman of asset management giant Rockefeller International, views the decisive breach of 5% in yields as a potentially significant signal impacting the prosperity of AI, indicating that the transmission logic involves an increase in government borrowing demand and rising fiscal risk premiums, which could push the benchmark financing costs higher; tech giants would then need to offer higher returns to continue attracting the capital required for building AI infrastructure. He emphasized the financing pressure of upfront investment against over $1 trillion in infrastructure spending compared to around $200 billion in annual AI application revenue. The two figures measure application revenue and the scale of infrastructure construction respectively and do not directly offset to create a funding gap in the industry; however, the impact of rising external financing costs can be clearly quantifiedan increase in rates by 100 basis points on every $100 billion of new borrowing raises the annual interest burden by $10 billion. Moreover, higher discount rates will reduce the present value of future cash flows, putting projects with long construction cycles and reliance on continued financing under dual pressures of profitability and valuation.