Amazon Raises $40 Billion in Debt for AI Infrastructure as Internal Costs Mount on Alexa Overhaul

Amazon has tapped the bond market for nearly $40 billion in early July, proceeds that will flow directly into data centers and artificial-intelligence capacity at the company’s cloud unit, Amazon Web Services. The capital injection comes just weeks before second-quarter earnings are due, and against a backdrop of rising internal tension over the cost of transforming Alexa into a fully autonomous AI agent.

AWS remains the engine of the company’s growth. In the first quarter of 2026, cloud revenue jumped 28% year over year to an annualized run rate of roughly $150 billion, its fastest expansion in 15 quarters. Operating profit from the unit hit $14.2 billion, pushing margins to 37.7%. Across the entire group, revenue rose 17% to $181.5 billion, while operating income climbed to $23.9 billion—a record operating margin of 13.1%.

The new debt, reported in a range of $25 billion to $40 billion depending on the source, will bankroll a much broader investment push. Analysts project full-year capital expenditure for 2026 at around $200 billion, up from $132 billion last year. Fitch recently assigned an “AA-” rating to a series of Amazon’s unsecured notes, citing a strong operating profile and estimated 2026 EBITDA of roughly $160 billion, but warned that the aggressive spending could produce negative free cash flow in the near term.

Not all internal projects escape scrutiny. Under the codename “Moonraker,” Amazon is developing a premium version of Alexa that can execute complex, multi-step tasks from a single request—booking a ride and notifying a contact simultaneously, for example. Internal planning documents show that the AI chips required for Moonraker have already cost more than $100 million this year alone. That price tag has prompted some senior managers to suggest scaling back or delaying the project to protect margins, according to leaked documents.

Should investors sell immediately? Or is it worth buying Amazon?

Wall Street, however, remains broadly optimistic about the company’s direction. Goldman Sachs raised its price target to $335 from $325 while reaffirming a “Buy” rating. Needham and TD Cowen also hold “Buy” ratings, with respective targets of $300 and $340. The consensus among analysts expects second-quarter revenue of roughly $196 billion and earnings per share of $1.82 when Amazon reports on July 30 after the U.S. market close. The timing of this year’s Prime Day, which generated a record $26.4 billion in spending, could provide additional momentum.

While the investment thesis centres on long-term AI payoff, the stock has spent recent weeks consolidating. Shares closed Friday at €214.85 on the Frankfurt exchange, down 0.62% on the day but still up 1.11% on the week and 4.19% over the past month. Year to date, the stock has gained 11.14%. That leaves it 9.75% below its 52-week high of €238.05 set in May but 29.52% above the February trough of €165.88. The 50-day moving average of €219.02 sits just above the current price, while the 200-day average of €201.09 provides a floor. The relative strength index of 52.6 signals neutral territory.

Legal developments add peripheral risk. U.S. consumers have until the end of July to file claims in a $2.5 billion settlement with the Federal Trade Commission over allegations that Amazon enrolled Prime members through deceptive practices and made cancellations unduly difficult. Individual refunds could reach $51 per person. Separately, the Australian Competition and Consumer Commission has initiated legal proceedings against Amazon’s Australian arm, accusing it of unfair contract clauses related to the introduction of advertising on Prime Video.

Chart watchers see a market still weighing the promise of AI-led growth against the near-term drag from record capital spending. The bond issuance addresses immediate funding needs, but it is the efficiency with which Amazon converts those billions into higher-margin revenue that will ultimately determine whether the current consolidation phase turns into a fresh leg higher.