New York, July 10, 2026, 17:10 (EDT)
Amazon.com, Inc. NASDAQ:AMZN slipped 0.69% to finish at $245.34 Friday after a filing on July 9 locked in terms for its new bond issue. Amazon’s $25 billion bond has $13.5 billion of debt due in 2036 or later, which is 54% of the total, as buyers continue to shed longer AI-linked credit. The seven fixed-rate slices carry annual coupon payments totaling $1.306 billion — about 6% above Amazon’s trailing free cash flow of $1.232 billion, which is operating cash after capex.
The gap is clear but not dramatic. Amazon had $143.1 billion in cash and marketable securities at March 31, and operating income over the last year was $85.4 billion. That puts the fixed coupon bill at about 1.5% of operating profit. The problem is cash conversion. Net property and equipment purchases hit $147.3 billion for the period, cutting into how much accounting profit actually turns into spendable cash.
Stocks finished Friday with no big moves. Amazon trailed the Nasdaq Composite and Microsoft NASDAQ:MSFT. Alphabet NASDAQ:GOOGL fell too. Amazon’s price-to-earnings ratio stayed higher than both other cloud players.
| Asset | Friday close | Daily move | P/E |
|---|---|---|---|
| Amazon | $245.34 | down 0.69% | 29.3x |
| Microsoft | $385.10 | up 0.19% | 22.9x |
| Alphabet | $357.18 | fell 0.49% | 27.2x |
| Nasdaq Composite | 26,281.61 | gained 0.29% | — |
The maturity stretch is significant. Roughly $9 billion—making up 36% of the overall issue—won’t mature before 2046. The fixed-rate notes carry a face-value-weighted coupon of 5.39%. Another piece, a $750 million floater, resets every quarter at compounded SOFR plus 0.58 percentage point. SOFR tracks overnight borrowing that uses U.S. Treasurys as collateral.
Demand was still there but weaker than in March. Peak orders for the July offer hit about 2.5 times the deal size, so buyers sought $2.50 for every $1 available. In March, that multiple was 3.4. Amazon said it may use the new funds for future capital spending or to pay debt coming due. Not every dollar is going to AI.
| Demand measure | July 2026 sale | March 2026 sale |
|---|---|---|
| Offered or targeted principal | $25.0 billion | $37.0 billion |
| Peak investor orders | $62.0 billion | $126.0 billion |
| Peak order coverage | 2.5x | 3.4x |
BofA Global Research, part of Bank of America Corp. NYSE:BAC, said that bonds from the top five hyperscalers — the big operators running cloud and data center networks — are yielding about 0.6 percentage point more than blue-chip bonds with the same rating and maturity. That’s now the biggest premium seen in the investment-grade market. AI-related high-grade debt sales hit $270 billion across currencies this year, nearly double the total for all of 2025. “We prefer taking more near-term risks,” DoubleLine’s Mariya Entina said. Capital Group’s Pramod Atluri added, “It’s not clear what the industry landscape is going to look like ten years from now.” Financial Times
The $1.3 billion coupon bill isn’t the only risk for shareholders. Vishal Khanduja, head of broad-markets fixed income at Morgan Stanley NYSE:MS, said, “I think credit risk is too undervalued right now in the market.” If AWS revenue lags behind surging data-centre costs, free cash flow could stay low, which might mean more borrowing. Long-lived equipment could end up obsolete before it pays off. Business Insider
Amazon is betting on contracted demand. CEO Andy Jassy told investors in April that the company isn’t investing “on a hunch,” highlighting that customers have already locked in a big chunk of AWS capital spending for 2026. Amazon expects to see that turn into revenue in 2027 and 2028. Brian Mulberry, chief market strategist at Zacks Investment Management, said the growth in AI deals shows there’s “real, high-growth revenue.” Reuters
Amazon shares aren’t moving much right now. With the stock trading at 29.3 times earnings, above both Microsoft and Alphabet, investors don’t have much room if it takes longer for cash flow to pick up. The bond market has already slapped a cost on that delay.
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