AMZN Inches Higher Premarket: Amazon Reportedly Seeks To Offload $8B Of Nvidia Chips To Investors

• Amazon is reportedly considering moving billions of dollars of Nvidia AI chips into a financing vehicle and leasing them back.
• The proposed structure could shift part of the funding burden to outside investors as Amazon ramps up AI infrastructure spending.
• AMZN shares have gained 7.5% year to date despite a 3.9% decline in September.

Amazon.com Inc. (AMZN) shares edged 0.6% higher in premarket trading on Friday after the Financial Times reported that the e-commerce and cloud giant is seeking to offload about $8 billion worth of advanced Nvidia chips to outside investors through a new financing vehicle.

According to the FT, Amazon has held talks with investors in recent weeks over moving thousands of Nvidia Grace Blackwell chips already being installed across more than a dozen U.S. data centers into a special-purpose vehicle (SPV). Amazon would then lease the chips back from the vehicle, effectively shifting ownership and part of the financing burden to outside investors.

Amazon Looks To Ease AI Spending Burden

Amazon could offer investors up to a 10% equity stake in the vehicle, while the SPV would raise debt to finance the chips, according to the report. 

The structure would allow Amazon to pursue a more asset-light approach as it ramps up spending on AI infrastructure, with the company investing heavily in data centers and advanced chips.

Amazon bought or leased the chips involved in the proposed deal and is installing them across data centers in at least five U.S. states, including Nevada and Virginia, the FT reported.

The move comes as Amazon’s AI spending weighs on its cash flows. In its latest quarterly results, Amazon reported a 20% jump in second-quarter sales to $200.6 billion, while AWS revenue surged 37% to $42.2 billion. However, trailing-12-month free cash flow turned negative at $7.6 billion, largely due to a $66.1 billion year-over-year increase in property and equipment purchases tied primarily to AI investments.

AMZN Stock Struggles

Amazon shares had a tough September, falling about 3.9% during the month, making it the weakest performer among the Magnificent Seven.

The stock has faced pressure as investors weigh Amazon’s massive AI infrastructure spending against the potential returns from those investments. The company has also been expanding its AI offerings, including its shopping-focused efforts.

Friday’s reported chip-financing plan could give Amazon another way to fund its AI infrastructure buildout while reducing the capital tied up in expensive Nvidia hardware and easing pressure on its balance sheet.

On Stocktwits, the retail sentiment for AMZN dropped over the past week and was ‘bearish’ on Friday. Shares are up 7.5% year to date.

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