Amazon Explores Chip Leaseback to Ease Cash Flow Pressure
Amazon is exploring a creative financial strategy to manage its soaring capital expenditures. According to the Financial Times, the company is in discussions to sell approximately $8 billion worth of Nvidia chips to an investor-funded vehicle and then lease them back. This move comes as Amazon faces significant cash flow challenges, with free cash flow turning negative in the first half of 2026. Specifically, free cash flow was negative $18.17 billion in Q1 and negative $8.82 billion in Q2, totaling a negative outflow of $26.99 billion over six months.
The reported deal would help offset less than a third of the first-half cash outflow and roughly 4% of the $220 billion capital expenditure plan for 2026. Amazon's CEO, Andy Jassy, has framed the cash drain as temporary, noting that data centers require substantial upfront investment before generating returns. AWS revenue grew 36.7% in Q2, with a backlog of $496 billion, supporting the long-term strategy.
Despite the optimism, the leaseback plan signals funding pressure rather than a complete solution. Jassy mentioned that Amazon has multiple funding options, including issuing debt, but the leaseback would convert owned assets into recurring lease costs. The third-quarter results will be crucial in determining whether the cash flow situation improves or worsens.