Amazon Funds AI Infrastructure While OpenAI Secures Oracle Deal

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Big tech companies are pouring billions into artificial intelligence, signaling a massive push for growth and infrastructure development, even as investor concerns about a potential 'AI bubble' lead to market volatility. Amazon, for instance, is planning a significant bond issuance, with figures reported between $12 billion and $15 billion, to fuel its AI infrastructure. This comes as its capital spending is projected to hit $125 billion this year, and the company reportedly made a $38 billion deal with OpenAI. Other giants like Meta and Oracle are also raising billions through bonds for their AI initiatives. Morgan Stanley projects major tech firms, including Alphabet, will spend $400 billion on AI infrastructure this year, with a staggering $3 trillion expected for data centers by 2028 from companies like Microsoft and Alphabet, half of which could come from credit markets. Oracle, for example, has committed to a $300 billion deal with OpenAI, aiming for substantial cloud revenue from this partnership by 2030, though this move has raised investor concerns about its debt and cash flow. Microsoft also made a notable $5 billion investment in Anthropic.Despite these massive investments, a palpable fear of an 'AI bubble' is gripping investors. Major stock indexes, including the Dow Jones, S&P 500, and Nasdaq, recently saw significant drops, with tech leaders like Amazon, Microsoft, and Nvidia experiencing losses. A Bank of America survey reveals that 45% of global fund managers view an AI bubble as the biggest market risk, with many believing AI stocks are overvalued. Alphabet CEO Sundar Pichai acknowledged some 'rationality' in the AI boom but warned of the consequences if a bubble were to burst.Nvidia, often called the 'poster child for the AI Revolution,' is a key indicator of the market's health. While its stock is up nearly 40% this year, it recently saw a 2.5% dip amidst broader market concerns. However, experts suggest that Nvidia's strong demand and solid business foundations mean its stock trades at fair prices relative to its growth, countering some of the bubble fears specifically for the company. Investors are keenly awaiting its upcoming earnings report to gauge the AI market's strength.The surge in AI development is creating immense demand for data center power, becoming the next major investment frontier. Companies like Meta and Amazon are actively securing large renewable energy deals, and there is growing interest in nuclear energy, with Amazon, Alphabet, and Microsoft investing in it. Firms like NuScale Power and GE Vernova are developing small modular reactors to meet this need. Investors are also eyeing companies modernizing the existing power grid, such as Hitachi Energy.Beyond the tech giants, AI's influence is spreading. Jiga, an AI-driven sourcing platform, secured $12 million in funding to accelerate AI hardware development for clients like NASA and Siemens. Even life insurance executives, including MetLife, are discussing their AI plans, with MetLife's in-house AI platform, MetIQ, already helping lower expenses. Meta's CEO Mark Zuckerberg and CFO Susan Li highlighted how AI investments are improving ad targeting and content, contributing to a 26% rise in their third-quarter revenue to $51.2 billion.

Key Takeaways

Amazon is planning a bond issuance (reported between $12 billion and $15 billion) to boost AI infrastructure, with its capital spending projected at $125 billion this year, and reportedly made a $38 billion deal with OpenAI.
Oracle's $300 billion deal with OpenAI, announced September 10, aims for $166 billion in cloud computing revenue by 2030, but has raised investor concerns about Oracle's debt.
Microsoft invested $5 billion in Anthropic, while Meta's AI investments contributed to a 26% rise in Q3 revenue to $51.2 billion.
Morgan Stanley projects major tech firms, including Alphabet and Microsoft, will spend $400 billion on AI infrastructure this year and $3 trillion on data centers by 2028.
Concerns about an "AI bubble" led to recent stock declines for Amazon, Microsoft, Nvidia, and Meta, with 45% of global fund managers identifying it as the biggest market risk.
Nvidia's stock, up nearly 40% this year, is considered fairly valued by experts despite broader bubble fears, reflecting strong demand for its AI chips.
The growing demand for data center power is a new major AI investment area, with Amazon, Meta, Alphabet, and Microsoft investing in renewable and nuclear energy.
Jiga, an AI-driven sourcing platform, secured $12 million in Series A funding to accelerate AI hardware development.
Life insurers like MetLife are integrating AI, with MetLife's MetIQ platform helping to lower expenses.
Alphabet CEO Sundar Pichai acknowledged "rationality" in the AI boom but warned of risks if a bubble bursts.

Amazon plans $15 billion bond for AI growth

Amazon plans to issue a $15 billion dollar-denominated bond, its first in three years. This money will help Amazon invest more in artificial intelligence infrastructure. Other big tech companies like Meta and Oracle are also raising billions through bonds for AI. Morgan Stanley expects major tech firms, including Alphabet, to spend $400 billion on AI infrastructure this year. Amazon's capital spending is projected to reach $125 billion this year, and the company recently made a $38 billion deal with OpenAI.

Amazon seeks $12 billion bond for AI expansion

Amazon plans to raise $12 billion through a US corporate bond sale, its first in nearly three years. The company will use these funds to boost its AI investments and expand infrastructure. Other tech giants like Meta Platforms and Oracle are also raising billions for AI projects. Morgan Stanley predicts major tech companies, including Microsoft and Alphabet, will spend $3 trillion on data centers by 2028, with half coming from credit markets. Meta's CEO Mark Zuckerberg and CFO Susan Li stated that AI investments improve ad targeting and content, driving a 26% rise in third-quarter revenue to $51.2 billion.

AI bubble fears cause tech stock sell-off

Major stock indexes like the Dow Jones, S&P 500, and Nasdaq all dropped on Tuesday. Tech giants such as Amazon, Microsoft, and Nvidia led the losses. Investors worry about an AI bubble and diminishing hopes for interest rate cuts. A Bank of America survey showed 45% of global fund managers see an AI bubble as the biggest market risk. Many investors believe AI stocks are overvalued, leading to concerns about the scale and funding of the AI boom.

Dow drops as AI bubble fears grow

The Dow Jones Industrial Average fell nearly 500 points on Tuesday, marking its fourth straight decline. The S&P 500 and Nasdaq also dropped significantly. Investors are concerned about a potential AI bubble and reduced hopes for Federal Reserve interest rate cuts. Major tech stocks like Nvidia, Amazon, Microsoft, and Meta experienced losses. Even with big AI deals, such as Microsoft investing $5 billion in Anthropic, these stocks still declined. Alphabet CEO Sundar Pichai acknowledged some "rationality" in the AI boom but warned no company would be safe if a bubble burst.

Data center power becomes next big AI investment

As AI infrastructure grows, the demand for power in data centers is becoming a major investment area. Some US governors propose that new data centers must generate their own energy to ease grid strain. Big tech companies like Meta and Amazon are already securing large renewable energy deals for their data centers. Nuclear energy is also gaining attention, with Amazon, Alphabet, and Microsoft investing in it. Companies like NuScale Power and GE Vernova are involved in developing small modular reactors. Investors are also looking at "bridge trades" in companies modernizing the existing power grid, such as Hitachi Energy. The next big opportunity in AI is powering the entire system, not just the chips.

Nvidia earnings test AI market strength

Investors are closely watching Nvidia's earnings report on Wednesday to see if the AI boom is slowing down. Critics worry about a speculative bubble after AI stock prices rose sharply. Dan Ives from Wedbush Securities calls Nvidia the "poster child for the AI Revolution" and expects it to benefit greatly over the next five years. While Nvidia's stock is up nearly 40% this year, it recently fell 2.5%. Melissa Otto of S&P Global Visible Alpha notes market concerns about overinvestment and whether Nvidia can maintain growth without fueling bubble fears.

Oracle's $300 billion OpenAI deal faces challenges

Oracle's stock has lost significant market value since announcing its $300 billion deal with OpenAI on September 10. Investors are uneasy about Oracle betting a debt-financed data farm on OpenAI. Oracle aims for $166 billion in cloud computing revenue by 2030, with most of that expected to come from OpenAI starting in 2027. However, Oracle's net debt has more than doubled since 2021 and is projected to nearly double again by 2030. The company also expects negative cash flow for five straight years, and the cost of hedging its debt is at a three-year high.

Jiga raises $12 million to speed up AI hardware

Jiga, an AI-driven sourcing platform, secured $12 million in Series A funding led by Aleph. The company helps NASA, Siemens, and other firms in aerospace, defense, and robotics get custom hardware parts faster. Jiga's platform uses AI to streamline the process, reducing weeks of work to hours. This funding will help Jiga meet the growing demand for hardware in AI development, robotics, and the space economy. The company aims to expand its production capabilities and improve AI-driven quality assurance for critical parts.

Life insurers discuss private credit and AI plans

US life insurance executives discussed their investments in private credit and artificial intelligence during their third-quarter earnings calls. Companies like Equitable Holdings, Aflac, and Prudential Financial expressed confidence in their private credit strategies despite recent bankruptcies in the sector. They highlighted careful underwriting and strong portfolio performance. Insurers also showed optimism about the real estate market, seeing it as a big opportunity. Additionally, AI is a major focus, with MetLife reporting that its in-house AI platform, MetIQ, helped lower expenses.

Nvidia stock shows strong AI demand

Nvidia Corporation remains a leading company in AI chips, with strong demand and high growth expected before its FQ3 '26 earnings report. The company is projected to show significant increases in revenue and earnings per share. Despite market worries about an AI bubble, Nvidia's stock trades at fair prices compared to its growth, without the high valuation typical of a bubble. Experts believe investor concerns about an AI bubble are not justified. Nvidia's strong demand and solid business foundations keep its positive outlook firm.