Amazon is quietly pouring more than $100 million this year alone into a secretive project codenamed “Moonraker,” internal documents show, as the company attempts to transform its voice assistant from a simple command taker into an autonomous AI agent capable of handling complex, multi-step tasks. The premium tier, likely to be branded “Alexa+,” is designed to book rides and notify contacts from a single request, embedding the assistant deeper into users’ daily lives. Yet behind the ambitious push, some Amazon executives are already urging the project be scaled back or delayed to protect margins — a sign of the tension simmering inside a company that is simultaneously borrowing record sums to fund its AI ambitions.
That tension spilled into the bond market on July 7, when Amazon placed $25 billion in new debt across eight tranches with maturities ranging from three to 40 years. Investor demand was notably tepid: order books reached only $60 billion, half the $120 billion seen during a similar March issuance. The 40-year tranche priced at 125 basis points over Treasuries, reflecting a market increasingly wary of Amazon’s swelling debt load. Long-term borrowings have jumped from $65.6 billion at the end of 2025 to $119.1 billion in the first quarter of 2026, pushing net debt past $92 billion. Interest expense rose to $800 million, up from $541 million a year earlier, while free cash flow over the trailing twelve months cratered 95% to just $1.2 billion — a direct consequence of spending $44.2 billion in Q1 alone. For the full year, Amazon plans roughly $200 billion in capital expenditure, compared with $131 billion in 2025, and Kavout analysts project free cash flow could turn negative by $17 billion to $28 billion.
The financial strain is being fueled by an aggressive expansion of AWS infrastructure, much of it dedicated to serving AI partners OpenAI and Anthropic — a $16.8 billion unrealized gain on the latter’s stake helped inflate Amazon’s Q1 net profit to $30.25 billion. Strip that out, and the underlying operating picture remains remarkably healthy, providing cover for the spending spree. Revenue rose 16.6% to $181.52 billion, while adjusted earnings per share of $2.78 smashed the consensus estimate of $1.653. AWS delivered its fastest growth in 15 quarters, jumping 28% to $37.59 billion in revenue with a 37.7% margin. Advertising followed close behind, climbing 24% to $17.24 billion. For the current quarter, Amazon guided revenue between $194 billion and $199 billion and operating income of $20 billion to $24 billion.
On the ground, the build-out is accelerating. AWS has applied for permits to construct a four-building data center complex in Boling, Texas, with a price tag of $1.2 billion — roughly $300 million per building, each spanning 189,060 square feet on a 2,700-acre site. Construction is slated to begin August 1, 2026, with the first three buildings ready by early January 2027 and the fourth following in August 2027. This project is part of a broader $4 billion AWS commitment to Texas through 2029. But not all sites have cleared hurdles: a federal judge in Delaware has issued a temporary injunction halting a Wilmington data center project, citing insufficient environmental and zoning reviews. The stop-work order could drag on for months or even years, after local residents raised concerns over electricity and water consumption.
Should investors sell immediately? Or is it worth buying Amazon?
Wall Street, meanwhile, remains broadly bullish, though the range of price targets reflects some uncertainty. Goldman Sachs recently raised its target to $335 from $325, maintaining a “Buy” rating. Needham holds a $300 target, also “Buy,” while TD Cowen keeps its “Buy” at $340. Among 66 analysts surveyed, 15 rate the stock “Strong Buy,” 47 “Buy,” and four “Hold,” with an average target of $312.99. Yahoo Finance reports a median target of $315.22 from 56 largely bullish analysts.
The stock itself closed Friday at €214.85, down 0.62% on the day but up 1.11% on the week and 4.19% over the past 30 days. Year-to-date, the gain stands at 11.14%, placing the shares 9.75% below the 52-week high of €238.05 reached on May 5 and 29.52% above the February low of €165.88. With the 50-day moving average at €219.02 and the 200-day at €201.09, the price sits in a neutral zone, and the RSI of 52.6 confirms no extreme overbought or oversold conditions.
Amazon also faces other near-term distractions. The company is navigating a $2.5 billion settlement with the FTC over allegedly deceptive Prime enrollment practices; US consumers have until the end of July to file claims for up to $51 each. In Australia, the competition regulator ACCC is pursuing legal action over unfair contract terms related to advertising on Prime Video. And CEO Andy Jassy sold more than $20 million worth of shares in the second quarter alone — insider activity that, while not unusual, adds to the narrative of a leadership cashing out at a moment of peak capital intensity. For now, the market seems willing to bet that the long-term payoff from AI will outweigh the near-term cash flow pain, but the lukewarm bond reception and internal doubts over Moonraker suggest that patience may not be unlimited.
Ad
Amazon Stock: Buy or Sell?! New Amazon Analysis from July 12 delivers the answer:
The latest Amazon figures speak for themselves: Urgent action needed for Amazon investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from July 12.
Amazon: Buy or sell? Read more here...
