Cramer Thinks the US Debt Market Is Saturated. Amazon Just Went to London to Borrow
Jim Cramer raised a question on air that every Amazon investor should be asking right now: if the US debt market is big enough, why did the company just fly to London to raise billions?
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Amazon (NASDAQ:AMZN | AMZN Price Prediction) just went to London to borrow money, and Jim Cramer used his Mad Dash segment to point out that this isn’t the usual playbook for the world’s largest cloud vendor.
Cramer described the deal on air. Jim Cramer said it was a GBP 4.25 billion sale, with Jim Cramer noting order interest of almost GBP 12 billion. He then floated a hypothesis and hedged it in the same breath: “I would have thought they could have raised the same amount in the US. But maybe we’ve saturated.”
That question is worth taking seriously if you own Amazon, because how the company pays for its AI buildout is starting to matter as much as the buildout itself. Someone has to power, cool, and network all that spending, and we pulled together seven of the suppliers doing exactly that in a free AI infrastructure report.
Why Amazon Went Shopping in London
Amazon’s capital spending has reached a level where every source of funding counts. Second-quarter cash capital expenditures came in at $53.1 billion, and CFO Brian Olsavsky said the money “primarily relates to AWS and generative AI as we invest to support strong customer demand.”
Long-term debt has grown to match. It rose from $65.6 billion to $119.1 billion year over year, while total liabilities expanded 56% to $544.07 billion. Trailing free cash flow turned negative at -$7.6 billion.
The dollar backdrop has also stiffened. The 10-year Treasury yield closed at 4.8% on September 8, the highest reading in the supplied series, up from 4.04% a year earlier.
On the July 30 call, Olsavsky said, “You’ve seen us issue debt this year. We have a lot of options available to us as we continue to fund this growth that we’re seeing in AWS.” The London deal is one of those options being used in size.
What a Spread Over Gilts Actually Tells You
A gilt is a bond issued by the UK government, and it plays the same benchmark role in London that a Treasury does in New York. When a corporate issuer prices in sterling, its yield is quoted as a spread over the equivalent-maturity gilt, and that spread reflects credit risk.
Jim Cramer said the Amazon bonds were expected to trade around 55 basis points over gilts, calling that “not bad.” A basis point is one hundredth of a percentage point, so 55 basis points is roughly half a percent of extra yield above the government curve.
That is a tight spread for a corporate deal of this size, and the order book Cramer described supports the view that pricing was well set. Almost three times coverage on a GBP 4.25 billion offering is a lot of demand chasing a fixed pool of paper.
What the spread does not prove, by itself, is that Amazon could not have raised the same money in dollars. Cramer said as much when he floated the saturation idea and then qualified it. Strong sterling demand is evidence about the sterling market and should be treated as such.
Alphabet and Microsoft Are Paying for the Same Buildout Differently
Cramer noted Amazon is following Alphabet (NASDAQ:GOOGL) into the sterling market, and that two mega-cap borrowers going abroad in sequence makes the pattern worth watching. Alphabet’s capex reached $44.92 billion in the second quarter, up 100% year over year.
Alphabet funded that spend with a mix that included $49.6 billion in net equity, a $40 billion at-the-market program, and $20.3 billion in senior unsecured notes, and its long-term debt jumped from $46.5 billion to $98.2 billion. Google Cloud backlog sat above $460 billion, giving the debt something to chase.
Microsoft (NASDAQ:MSFT) is taking a different route. Full-year fiscal 2026 capex hit $115.95 billion, with guidance shifting to approximately $175 billion after a move from finance to operating leases.
CFO Amy Hood emphasized flexibility, saying, “The investment into land and data center builds is actually quite flexible.” Each company is paying for capacity years ahead of revenue with a different financing mix.
Where AMZN Stock Sits
Amazon trades at $252.40 as of September 9, down 9.24% over the past month and up 9.35% year to date. Market cap sits near $2.72 trillion on a P/E of about 35x.
The bull case rests on AWS growth of 36.7% year over year and a $496 billion backlog. CEO Andy Jassy said the servers “have a useful life of at least five to six years, and most of our AI capacity these days is being contracted for at least five-year terms.”
The bear case is that debt-funded capex compounds interest expense while free cash flow is already negative, and every basis point on the marginal bond becomes a real drag on equity returns.
On balance, the AWS contract book and the reception in London argue that the buildout is being financed on acceptable terms today. The question for investors is whether they are willing to sit through the free-cash-flow trough until the data centers come online and start earning back their capital.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks.
