Amazon's $92B Bond Binge Raises Concerns Over Crowding Out Other Issuers

Amazon's massive borrowing spree has raised concerns among investors and regulators alike. The e-commerce giant has issued nearly $92 billion in bonds this year alone to fund its $220 billion capital expenditure budget, making it the largest borrower among hyperscalers.

The company's free cash flow has collapsed from $32.9 billion in 2024 to $7.7 billion in 2025 as capital expenditures reached $131.8 billion, consuming 94.5% of operating cash flow. The bond market has become essential to Amazon's AI strategy, rather than optional.

The European Central Bank (ECB) warned on August 31 that hyperscaler borrowing risks crowding out other issuers, specifically naming Amazon as a concern. Investor appetite for hyperscaler bonds is weakening, with cover ratios declining from nearly five times in February to below two times in July.

AWS revenue growth may not outpace rising depreciation and interest expense, putting pressure on margins. Tracking interest expense and depreciation will be crucial in determining whether the AI investment thesis is working.