Moody's affirms Amazon's A1 senior unsecured rating

Moody's affirms Amazon's A1 senior unsecured rating

Moody’s Affirms Amazon’s A1 Senior Unsecured Rating Amid Positive Outlook
Moody’s Investors Service has reaffirmed Amazon.com Inc.’s (NASDAQ:AMZN) A1 senior unsecured notes rating and Prime-1 commercial paper program rating, while upgrading its credit outlook to from stable. The ratings agency cited Amazon’s improved operational performance, robust free cash flow generation, and strategic investments in growth areas such as Amazon Web Services (AWS) and generative artificial intelligence (AI) as key factors in its decision.

Amazon’s North America and International segments have driven stronger credit metrics, including a revised RCF/Debt ratio of 81.6% for the year ended December 31, 2024. The company’s ability to maintain low leverage while accelerating capital spending—particularly in AWS and AI—reflects its strong liquidity position, with cash and equivalents exceeding $78 billion as of year-end 2024. Moody’s highlighted AWS’s leadership in cloud computing and its growing profitability from AI-driven demand, alongside Amazon’s expanding ecosystem of advertising revenue and third-party sellers.

The positive outlook underscores Moody’s expectation that Amazon will sustain strong credit metrics and liquidity as profit growth funds capital investments. However, the agency noted potential risks, including intensified competition in cloud computing and the online retail sector, as well as the need for disciplined financial strategies to avoid overextending resources through acquisitions or shareholder returns.

For an upgrade to Amazon’s A1 rating, Moody’s outlined requirements such as consistent profit growth, stable operating margins, and further strengthening of its cash-to-debt position. Conversely, a downgrade could occur if operational performance weakens or investments fail to deliver returns.

Amazon’s ownership of Whole Foods Market, Inc. also saw its outlook revised to positive, with its A1 senior unsecured rating affirmed. The company remains well-positioned to capitalize on long-term trends in e-commerce, cloud computing, and AI innovation.

According to Moody’s analysis: Yahoo Finance, Investing.com
Investing.com reports: Investing.com, Moody’s Investors Service