Amazon $8 Billion Nvidia Chip Sale-Leaseback|Scarce Chips Rented Back to Shield Its Credit?

Why sell what is scarce

Amazon is reportedly in talks to sell about eight billion dollars of Nvidia chips to investors, then rent them back. Yet Amazon says it cannot build capacity fast enough, and it is raising what customers pay to rent Nvidia chips. The Financial Times reported the talks, citing people familiar with the matter. The chips are thousands of Nvidia Grace Blackwell processors.

They are already running at more than a dozen Amazon data centers in five states, including Nevada and Virginia. Amazon declined to comment. Chief executive Andy Jassy described demand in July. "We will still not have enough capacity to meet all the demand we have in 2026." Under the plan, a separate vehicle would own those chips, and Amazon would lease them. That vehicle would raise its money by issuing debt.

Over the past twelve months, Amazon spent one hundred seventy-three billion dollars on capital projects. Its operations brought in one hundred sixty-one point four billion dollars of cash. Spending outran operating cash by roughly eleven point six billion dollars. And the pace is still rising. On its July earnings call, management raised the 2026 plan to about two hundred twenty billion dollars.

The earlier plan was about two hundred billion. The reason it gave was the higher cost of memory. Amazon has said the new figure is almost double what it spent in 2025. The gap has been covered with borrowing. Management said Amazon had issued debt in 2026 and would look at all options to fund AWS's growth. One tally, from Crypto Briefing, puts Amazon's bond issuance this year at more than sixty-two billion dollars.

Now set the chip deal against that gap. Eight billion dollars is more than two-thirds of the past year's shortfall between capital spending and operating cash. It would not close the gap. But it is large enough to change how Amazon pays for the build. More borrowing has its own cost, and bond investors have said so publicly.

Goldman Sachs Asset Management has turned underweight on debt from the biggest AI cloud spenders. Lindsay Rosner, its head of multi-sector fixed income investing, explained why on Bloomberg TV. Jassy, on demand: "In fact, the demand we already have for 2028 is striking." Rosner, on the bonds paying for it: "For that sector at large we are underweight knowing more issuance will come."

Put side by side, the two lines describe a loop. Demand that keeps growing needs capacity that keeps being financed. Each new bond adds to the supply that makes lenders cautious. GuruFocus reported that hyperscalers are leaning more on debt as capital spending squeezes free cash flow. The Financial Times places the Amazon talks inside a wider push.

Tech companies are pursuing a range of ways to move debt off their balance sheets. The goal, it reports, is to preserve their creditworthiness. Here is the reported structure. A special-purpose vehicle, a company set up for a single job, would own the chips. Amazon would lease them back. The vehicle would raise capital by issuing its own debt.

Outside investors could hold up to ten percent of its equity, and Amazon would own none of it. So the borrowing does not disappear. It sits under a different name. The report says the talks are preliminary and could change.

Money is not the only bottleneck

Money buys chips only if there are buildings to put them in. That same week, AWS chief executive Matt Garman published a memo of more than three thousand one hundred words. In it, Amazon pledged more than one billion dollars over five years to communities where it runs data centers. That is on top of more than one billion dollars it says it spent in such communities over the past three years.

The AP describes the pledge as a response to growing backlash from politicians and consumers. Garman pointed to more than one hundred data center moratoriums being considered across the country. He warned the U.S. "could be writing its own losing ticket to this race." And, he added, "the consequences would last generations." The pushback shows up in the data.

A CBS News poll found that more Americans oppose data centers in their own areas than favor them. Bank of America's industrials team came back from a September conference saying demand still looks strong. According to their note, the hard part is now turning approved orders into finished facilities, because of permits and local pushback. Amazon has run into this itself.

In Maryland, it scrapped plans for a data center at the Calvert Cliffs nuclear plant after intense blowback from residents. So the capacity Jassy says is short depends on sites, not just on financing. That makes the chips in this deal unusual. They are already installed and operating.

Who carries the aging-chip risk

That raises a second question about these chips: how quickly they lose value. Companies spread a chip's cost over its useful life, which is called depreciation. Investor Michael Burry, as MarketWatch describes it, argues that Amazon is not properly depreciating its microchip assets. Amazon's own pricing points the other way.

It is raising prices by about fifteen percent on EC2 Capacity Blocks, which rent out access to Nvidia chips. The increase runs from the older A100 to the newer B300. Amazon had not raised the A100 price since January. MarketWatch wrote that raising prices on older chips punctures Burry's argument. Amazon is not the only one raising prices.

Nebius, a rival GPU cloud, posted rates that lift selected Nvidia chip prices by sixteen point nine to twenty-one percent. Its on-demand price for the older H100 was three dollars eighty-five cents per GPU-hour. The new rate is four dollars fifty. Financefeeds summed up the logic. A landlord can charge more for a chip it does not make only while that chip stays scarce.

For now, older chips are earning more rent, not less. That makes them look less like a fading asset and more like one worth holding onto. Even so, Amazon is looking to move these chips off its books. The Financial Times says the structure would let Amazon keep using the chips without keeping the depreciating assets on its balance sheet.

Wccftech calls it a way to shift the riskier and costlier parts of ownership to outside investors. Consider where each piece would end up. Rental income from the chips flows through AWS customers. But Trefis notes that most of AWS's AI capacity is already sold on multi-year contracts. Higher list prices may take time to show up in revenue. If the chips lose value, that loss falls on whoever owns them.

Under the plan, that would be the vehicle and its investors. There is a catch. The vehicle could win an investment-grade credit rating, which would open the door to insurers and pension funds. According to the report, what could support that rating is Amazon's own double-A credit profile. So the risk is meant to leave Amazon, while lenders' confidence may still rest on Amazon. The industry has done this before.

Tech companies have used residual value guarantees, which give lenders assurances about the future value of chips or data centers. The Financial Times says this approach has obscured how much risk the tech giants are taking on. This is not a niche practice. The Wall Street Journal found that the nine largest U.S. tech companies had about three trillion dollars in off-balance-sheet commitments as of August.

The reports describe no such guarantee in Amazon's talks, and the terms are still preliminary.

The term that decides it

So the opening puzzle reads differently now. Amazon is not getting rid of chips it doesn't need. It would rent back chips it does need, so the debt behind them sits outside its own books, at a time when spending is outrunning operating cash. If a deal is signed, the term to watch is who carries the chips' future value.

If outside investors take that risk without an Amazon guarantee, shareholders shed some depreciation risk and still use the chips. If Amazon backs the chips' value, the risk stays with shareholders. It just sits off the balance sheet.

Informational only, not investment advice. Figures and quotes come from the linked reports.