Amazon wants to move $8 billion of Nvidia chips off its books

Amazon is in talks to move about $8 billion of Nvidia chips off its own books, according to the Financial Times. The plan, as reported on 2 October and carried by Reuters, is to put thousands of Nvidia Grace Blackwell chips into a special-purpose vehicle, have that vehicle borrow from outside investors, and then lease the chips back. The FT cited people familiar with the matter. Amazon and Nvidia did not respond to Reuters. Nothing has been agreed, and the plan could change or fall away.

What was reported. Over recent weeks Amazon has held talks with investors to gauge interest. The vehicle would raise money through debt, and Amazon would offer an equity stake of up to 10% in it. The chips were bought or leased by Amazon and are installed in more than a dozen US data centers across five states, including Nevada and Virginia. They would not move. What would move is who owns them and who carries the debt against them. Amazon would pay lease fees to keep using them.

What was not reported. The banks arranging it, the interest rate, the length of the lease, the size of the lease payments and the names of any investors. Without those we cannot say what the deal would cost Amazon, or how much risk the lenders would take on.

How big is it. Amazon has said it expects capital spending of $220 billion this year, most of it going to AI. Eight billion dollars is about 3.6% of that, by our arithmetic. Small against the total. The size is not the point. The structure is.

Why we are filing it. Our infrastructure-economics condition asks one question: who generates the revenue that pays for a build-out of roughly a trillion dollars, and whose balance sheet carries it until then? Specialist cloud companies have borrowed against their chips for some time; CoreWeave is the usual example. Amazon is not a specialist. It is one of the largest and most profitable builders in the world. If even Amazon is looking for outside lenders to own its newest chips, that tells you how heavy the bill has become, even for the companies best able to pay it.

It also changes where the risk sits. Today, if a generation of chips loses value faster than expected, that loss shows up at the company that owns them. In a sale-and-leaseback, the owner is the vehicle and its lenders. Amazon keeps the use of the chips and swaps the up-front cost for a stream of lease payments. Nothing about that is unusual in finance. Airlines do it with planes. But a lease is still an obligation, and lenders to the vehicle will want to know how long a Grace Blackwell chip stays worth what was paid for it.

How we read it. Two things are true at once. Money is arriving: outside investors are being asked to fund chips that Amazon already uses, which adds a new source of capital to the build-out. And risk is moving, not shrinking: the lenders take on the question of what these chips are worth in three or four years, and Amazon takes on lease payments in place of an asset. We file it as mixed, against our infrastructure-economics condition, and as minor. It is a plan in talks, reported through anonymous sources, and it may change or not happen. Amazon's color on the map does not change. Nothing turns red.

The backdrop. The 10-year Treasury yield fell to 5.18% on 2 October after the September jobs report showed 29,000 jobs added. That is still above our 5% warning level and still inside the band we track, so it is context here, not a new signal. Borrowing for data centers is being priced against that rate.

What would change the picture. The vehicle being funded, with its size, interest rate and lenders named, would make this a meaningful signal. Amazon describing the structure in a quarterly filing or on its late-October earnings call would confirm it from the company's side. Another of the largest cloud builders announcing a similar chip leaseback would show a pattern rather than a single deal. And if the talks end without a deal, we will say so.