As investors dumped tech stocks in the fourth quarter of 2018 on concerns of rising interest rates, an emerging trade war with China and a looming government shutdown, Amazon followed suit and loaded up on low-risk government bonds.
Amazon increased its U.S. government and agency securities holdings by a record $6.8 billion in 2018, ending the year with $11.7 billion worth of the debt, the most ever, according to the company's annual report. That's more than double the amount Amazon had in the previous year and the most as a percentage of total cash, equivalents and marketable securities (28 percent) since 2010.
"Any time there is uncertainty in the market, putting excess cash into 'risk-free' investments seems like a prudent business decision," said W. Brooke Elliott, an accounting professor at the University of Illinois at Urbana-Champaign.
The category of government and agency securities includes Treasury notes, like two-year and 10-year bonds, and securities issued by government-sponsored enterprises like Fannie Mae and Freddie Mac.
Amazon has historically allocated a much lower portion of its available cash to government debt than have tech rivals like Google and Facebook, which put roughly half their cash and short-term investments in U.S. government securities, and Microsoft, which committed 80 percent to Treasurys and agency notes last year.