Amazon is seeking to move $8 billion in Nvidia chips off its balance sheet, signaling a potential shift in how hyperscalers finance AI infrastructure.
Amazon is restructuring the ownership of AI hardware powering its data centers through a financing mechanism where the risks to equipment owners may not be fully apparent.
Amazon is in talks to move $8 billion of NVIDIA Grace Blackwell chips into a special purpose vehicle, according to the Financial Times. The vehicle would issue debt to outside investors, purchase the chips, and lease them back to Amazon. The hardware remains installed in data centers across at least five states, with Amazon retaining up to 10% equity in the vehicle.
The timing reflects Amazon's accelerating capital intensity. In the second quarter alone, Amazon spent $54.2 billion on capital projects—68% more than the prior year. CEO Andy Jassy has committed to roughly $200 billion in spending for 2026. Over the past 12 months, free cash flow declined to -$7.6 billion, while long-term debt rose to $119.1 billion from $65.6 billion a year earlier. A leaseback structure allows Amazon to continue operating the chips while protecting its credit rating and moving the associated obligations into lease disclosures rather than debt.
The arrangement benefits Amazon at investors' expense. Airlines execute sale-leasebacks on aircraft that fly productively for decades. AI chips face a different trajectory. Grace Blackwell is already one generation behind Vera Rubin. NVIDIA reports that Vera Rubin delivers 35X lower token costs than Grace Blackwell Ultra. NVIDIA estimates roughly $25 billion per gigawatt of revenue for Grace Blackwell and approximately $40 billion for Vera Rubin. Each new product launch reduces the collateral's residual value.
On the July earnings call, Jassy noted that Amazon servers take "a little less than three years" to break even and operate productively for at least five to six years. Amazon captures the early, profitable period. Debt holders are left with later years when chips two generations old require refinancing or remarketing.
NVIDIA is establishing similar financing mechanisms. The company reported $279 billion in supply commitments and guarantee obligations (capped at $108.5 billion) for AI cloud and data center partners. NVIDIA has enlisted six asset managers and banks to raise more than $500 billion in outside capital for AI infrastructure. Management acknowledged: "We know some will call this circular financing." NVIDIA projects that AI labs it supports will represent roughly one-quarter of its business next year.
Market demand for computing capacity remains intense. NVIDIA can supply approximately 70% of what customers want. With chips depreciating rapidly, major buyers are choosing to pass the ownership risk. Amazon is prioritizing cash preservation over hardware ownership. Customers want the processing output and are transferring the obsolescence risk to third-party financiers.
Three developments will indicate whether this becomes standard practice. First, Amazon's third-quarter earnings report will reveal whether the vehicle is disclosed and show how lease obligations have grown. Amazon has guided to $22.5 billion to $26.5 billion in operating income for the quarter. Second, the interest rates investors demand on the debt will be telling. A wide spread would suggest lenders are pricing in depreciation risk that equity investors have overlooked. Third, whether other cloud giants announce similar deals within two quarters will be decisive. If they do, more of AI infrastructure's cost will move off the balance sheets that investors review, leaving lenders holding chips that NVIDIA actively works to make obsolete.