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Google to pay SpaceX $920M a month for compute capacity at xAI data centers
- sorenjan 4mo agoIs this another circular investment to help pump up the stock valuation? Why would Google need to rent that much compute? > Google parent Alphabet has made a windfall from backing SpaceX, which was worth $12 billion at the time of its 2015 investment, and is looking to go public at a valuation of over $1.75 trillion
- verdverm 4mo agoantigravity is a token hog
- sandeepkd 4mo ago> SpaceX said in the filing that if it fails to “deliver access to the committed amount of GPUs by September 30, 2026,” Google can immediately end the agreement, or accept the number of GPUs provided at a reduced fee after a one-month grace period. > After this year, the agreement can be terminated by either party provided they give 90 days’ notice. Circular financing at its peak for the IPO. There has to be some regulatory body to not allow such shady things
- JumpCrisscross 4mo ago> Circular financing Circular financing would require SpaceX to buy a similar quantity of stuff from Google. (Or invest in Google.) We have no evidence of that. Instead this looks like Google taking advantage of SpaceX’s desire to print revenue today versus a month from now. (If the agreement is terminated with no exchange of goods, it might be market manipulation. But still not circular financing.)
- singron 4mo agoIt's circular since Google owns part of SpaceX. According to [1] they own 7% of SpaceX, so a $1.75T IPO would value their stake at $120B. The target IPO price is >90x revenue, so if Google increases SpaceX's revenue by $11B, SpaceX's valuation could increase by $990B to maintain the same multiple, which would increase the value of Google's stake by $69B. 1: https://finance.yahoo.com/markets/stocks/articles/alphabet-stock-offers-exposure-spacex-113105050.html https://finance.yahoo.com/markets/stocks/articles/alphabet-s...
- SlinkyOnStairs 4mo agoTheir exposure is more than just their ownership of SpaceX. If the SpaceX IPO bombs (or even merely underperforms), the expectations for the Anthropic/OpenAI IPOs collapse, and with that, everything else AI. AI companies can't afford to let any AI company go down.
- singron 4mo agoI'm not sure this is true for Google. Ignoring their equity in Anthropic, AI is generally a threat to Google, since it's the closest thing to upsetting their search monopoly. The best case for Google is if OpenAI and Anthropic are way out over their skis, and Google is the only major player left with their sturdier financial position. The worst case is if ChatGPT/Claude completely displace search and nobody wants to pay for gemini. I find it unlikely that all three go down for the same reason.
- JumpCrisscross 4mo ago> It's circular since Google owns part of SpaceX Not what circular financing means. Buying from a company you own stock in can be a conflict of interest, but it's only circular if you invest in the company and then they use those proceeds to buy your stuff. A past investor buying services from a company they are affiliated with is pretty par for the course in business.
- sandeepkd 4mo ago> Alphabet has made a windfall from backing SpaceX. Musk’s company was worth $12 billion at the time of Google’s 2015 investment How come its not a circular deal where google is investing little bit more money to make a whole lot more money
- jjtheblunt 4mo agothat's not circular though
- Robotbeat 4mo agoIt’s only circular if it violates my narrative, of course.
- fancyfredbot 4mo agoIt's circular when money flows from A to B and then back from B to A again. This is a series of transactions in which money flows from Google to SpaceX. There is no flow of money from SpaceX to Google. So it's not a circle.
- JumpCrisscross 4mo agoMore to the point, allegations of circular financing are about following cash. When NVIDIA invests in a company so they can buy NVIDIA chips, that raises a unique set of questions distinct from other types of conflict of interest. Affiliated parties doing business, as is the case between Google and SpaceX, has its own host of conflict-of-interest concerns. But they're distinct from those that arise in circular transactions.
- spikels 4mo agoGoogle is paying $12.00 per gpu-hour which costs SpaceX $1.50-$3.50. Who's taking advantage of who?
- darth_avocado 4mo ago> Circular financing Keep in mind, Google has a 6% stake in SpaceX, so this is more like exchanging millions to gain billions.
- harmmonica 4mo agoYeah, I just looked this up because my first thought was another circular financing deal (or not circular by definition but certainly backscratching). Looks like Google's SpaceX stake, diluted, based on a cursory search, at a $1.5T valuation is somewhere in the $80-$100B neighborhood (bought back in 2015 I think is what it said when SpaceX was valued in the low tens of billions if I'm remembering correctly). So you have Google sending $12B back to SpaceX annually in this deal, so maybe 12% or so of their equity stake at that valuation. I'm not sure how to feel about it other than a means of swaying people to buy into the IPO with the added benefit of actual compute value. And seems silly to ignore that the Google founders and Elon are buddies, or were, based on which gossip rag you believe in, and there's zero chance these types of deals are being made independent of those guys talking (when are they ever, of course, but it's even more obvious in this case given the players and their histories).
- HDThoreaun 4mo agoThere is nothing shady or circular in the text you quoted
- sandeepkd 4mo agoI avoided adding too many details, made a base assumption that folks on this topic would already be aware of google's investment in spaceX, probably should have added that too
- JumpCrisscross 4mo ago> made a base assumption that folks on this topic would already be aware of google's investment in spaceX, probably should have added that too Still doesn't make it circular financing. If SpaceX issued Google a dividend right after Google paid SpaceX, that would be circular.
- Havoc 4mo agoCloser to just vanilla juicing numbers than circular
- jeffbee 4mo agoI thought it was notable that in Google's press release yesterday regarding their new facilities near Amarillo they seemed to go out of their way to point out that the applications are not AI, listing "Search, Gmail, Maps, Cloud, online banking, and 911 systems" instead. I wonder if they find it more convenient to rent an existing one rather than face public scrutiny for building another "AI data center".
- foobarian 4mo agoI wonder if they are more than happy to let someone else take on the burden of the massive writedowns that are bound to hit in a couple of years.
- jeffbee 4mo agoPerhaps. It also seems to insulate Google from the risk that air quality regulators will be unexpectedly reinvigorated, while still providing to Google the benefits of xAI's lawlessness.
- no-name-here 4mo agoBurden in terms of tax implications, or in terms of the investment possibly not being profitable?
- salkahfi 4mo agoRelated / same story from different source (Bloomberg), submitted earlier: https://news.ycombinator.com/item?id=48416941 https://news.ycombinator.com/item?id=48416941
- BonoboIO 4mo agoHow did Elon get so much NVIDIA hardware before everyone else?
- novok 4mo agoI've heard the harder part is to have data centers to put the nvidia hardware than getting the hardware currently.
- FinnKuhn 4mo agoAnd the secret ingridient to building those faster than others is... crime. https://www.theguardian.com/technology/2026/jan/15/elon-musk-xai-datacenter-memphis https://www.theguardian.com/technology/2026/jan/15/elon-musk...
- mindslight 4mo agoHoly shit: > This article was amended on 16 January 2026 because a megawatt is a unit of power, not energy as an earlier version suggested.
- retr0rocket 4mo agoBecause he went all in with money before a lot of other people. He moved as fast as he could with known financing
- JumpCrisscross 4mo ago> How did Elon get so much NVIDIA hardware before everyone else? He’s the richest man on the planet and doesn’t have a track record of not paying for shit he buys. If you want to reliably offload your chips, he’s safer than e.g. OpenAI who might or might not have the money when the bill comes due.
- lmeyerov 4mo agotesla not paying bills: https://www.cnn.com/2025/07/31/us/elon-musk-company-unpaid-liens-invs https://www.cnn.com/2025/07/31/us/elon-musk-company-unpaid-l... x not paying bills: https://www.cnbc.com/2023/02/24/musks-twitter-has-been-sued-by-at-least-six-companies-for-unpaid-bills.html https://www.cnbc.com/2023/02/24/musks-twitter-has-been-sued-... spacex not paying bills: https://www.fastcompany.com/91124157/spacex-contractors-texas-say-musk-slow-to-pay-bills https://www.fastcompany.com/91124157/spacex-contractors-texa...
- superkuh 4mo agoAnother way to read this is, "Twitter's AI dept. has been doing so badly they don't have a use for billions of dollars of hardware they bought."
- Analemma_ 4mo agoOn the one hand, yes, this is really embarrassing for Grok. On the other hand, everyone except a couple Twitter randos already thinks Grok is worthless junk: there's no reputation left for it to to lose. And Elon is crying all the way to the bank with an extra $11bn in annual revenue.
- etempleton 4mo agoThe downfall of Twitter is one of the most spectacular self inflicted business failures I have ever witnessed. Amazing to think it was once so ingrained in mainstream society.
- deleted 4mo ago[deleted]
- stri8ted 4mo agoWhat metrics are you using to classify it as a downfall?
- guax 4mo agoI don't care either way but I got curious. Not an easy thing to gauge. X/Twitter stopped publishing MAUs after the acquisition. External estimates vary, some point to growth, some to stagnation. We know that revenue suffered. LOTS of partisan and emotional opinions for either. Google trends does paint a bleak picture for X but I am also questioning how much google itself can gauge that after LLMs exploded in popularity. Anecdotally I did notice that references and embeds to X are way less prominent and common than before. My usual news used to be filled with them. My consumption of the platform also plummeted after not being able to read threads when not logged, its much harder for me to get drawn into it. Still without data, I would be surprised if the changes to verification and logged out access did not massively hurt new adoption. With tiktoks prevalence amongst a new generation I would bet its a matter of time before X gets grouped to tumbler/facebook, not dead, but way past its peak and cultural relevance. If that has not already happened.
- wnmurphy 4mo agoWhich means more Grok degradation, more severe throttling, etc. I can't understand why xAI charges 50% more per month for Grok over competitors when it doesn't even gracefully downgrade to a cheaper model when paid subscribers hit the limit.
- 9dev 4mo agoWhy would you even want to use that dumpster fire of a model in the first place..?
- mschuster91 4mo agoProbably because it has all but zero filters on the input and output. It took widespread media outrage about "grok show me her in a bikini" to at least create a filter that bans such things. [1] https://counterhate.com/research/grok-floods-x-with-sexualized-images/ https://counterhate.com/research/grok-floods-x-with-sexualiz...
- Analemma_ 4mo agoDoes the thing where it wanted to move every conversation onto the topic of "white genocide in South Africa" not count as a filter on the output?
- deleted 4mo ago[deleted]
- root-parent 4mo agoWho uses Grok? Not even SpaceX engineers that is known...
- guywithahat 4mo agoI've used/use it. For a while it had one of the best lightweight coding LLM's, which actually lead to a #1 spot on openrouter usage ranking although they've fallen off the top 10 used now. It's also provided some good reasoning models, which perform better when dealing with non-PC topics. Also, although I've never used it for this, I believe some of the paid models produce some of the best "adult" content, and I know there are even subreddits which do nothing but praise Grok and "content" produces who use it.
- harmmonica 4mo agoTangent alert: a couple of questions for folks who know far more than I do about compute capacity and Google these days... Lately, like the past few months, I've noticed Google services (search, gmail, drive, maps) running very slowly to the point where, at the moment it happens, I always think it has to be my connection and not Google, but sure enough every time I check a couple of speed tests and they're... fine. And then I don't seem to be having the same latency from other sites/apps. Is there any chance that the commingling of the AI snippet and then directing users into the AI funnel through the text box is actually causing material performance impacts in other Google properties? Probably a dumb question because I can't imagine they would allow performance for broader properties to suffer for AI prompts/chats, but then again all this talk of compute starts making me think otherwise, like the prolific amount of prompting and chatting is causing massive across-the-board performance issues. Somewhat related, but does anyone use Gemini and end up with the experience where you have a chat and it's obvious, to yourself and to Gemini, that you're trying to find a product to purchase, but Gemini doesn't even link you to what you would think would be the obvious place to purchase the product? This happens daily where I interact with it, it suggests some products, but won't even provide a link to that product or, if it does provide a link, it's to some no name site that wouldn't come up as a highly-ranked paid or organic result through regular Google search. Keeps making me think this is a Google performance problem where they have not figured out how to take the entire AI chat and engineer it back into a simple short keyword phrase to get an acceptable search result. Btw, if anyone's thinking "why are you using Gemini because it's the worst?" I think that's fair and right. I have... reasons, but they're not super sensible ones.
- jeffbee 4mo agoDo you still perceive search and maps to be slow even when logged out?
- harmmonica 4mo agoI'm probably 50/50 with search in particular logged in vs. out and I do think I notice on both, but I'm not entirely sure. Just saying the search and maps algorithm is wading through so much of my history that it can't help but choke trying to deliver the "right" results?
- verdverm 4mo agoGoogle is getting in bed with some folks even more unsavory than themselves. The thing I noted most from I/O was how prominent and proud the are of partnering with Palantir. "Do no evil" has become "Let's do evil"
- kart23 4mo agogoogle: we are commited to carbon free data centers by 2030 (https://sustainability.google/reports/247-carbon-free-energy/ https://sustainability.google/reports/247-carbon-free-energy...) also google: renting capacity from a data center powered by 27 methane gas turbines on trailers https://www.epw.senate.gov/public/index.cfm/2026/4/whitehouse-calls-for-answers-about-musk-backed-xai-s-pattern-of-operating-illegal-data-center-gas-plants https://www.epw.senate.gov/public/index.cfm/2026/4/whitehous...
- btian 4mo agoThe deal ends in June 2029, which is before 2030.
- minraws 4mo agoSo you mean to say Google knows AI definitely won't be needed after June 2029... Understood...
- DonsDiscountGas 4mo agoThey also might switch power sources.
- deleted 4mo ago[deleted]
- dumbmrblah 4mo agoSo their hands are clean, but they’re outsourcing the dirty work.
- paulpauper 4mo agoSpace-X is an AI/datacenter company that also makes rockets
- 0xbadcafebee 4mo agoAnd cars, and 18-wheelers, and satellite internet, and home/commercial battery backups, and (formerly) solar roof tiles
- Robotbeat 4mo agoThat is Tesla.
- fancyfredbot 4mo agoFor now. SpaceX will be acquiring Tesla as soon as Elon gets around to it.
- dmode 4mo agoIt's not an AI company. It is a datacenter company. While all frontier AI labs are fighting for compute SpaceX is give up compute, instead of reserving it for their own models. That tells you all we need to know
- wmf 4mo agoWith ~$2.1B/month of GPU rental revenue, is xAI now profitable? Are all divisions of SpaceX now profitable?
- redox99 4mo agoYes, but as Elon himself remarked, these are short term leases (90 day exit window), not guaranteed long term contracts.
- tristanj 4mo agoYes they should be profitable. If SpaceX maintains profitability for 12 months, they are eligible for SP 500 index inclusion, even under the old rules Elon is pulling financial engineering black magic to make this happen.
- shostack 4mo agoMore like incredibly lucky that the global hardware market dried up for compute capacity even as his AI product flopped. Right place at the right time. I just dislike that it is now harder to avoid giving Musk money directly or indirectly.
- otterley 4mo agoIt’s not “black magic” to sell excess GPU capacity to third parties to make a profit. This is a legitimate business venture. It’s just not the business that people naturally expect a business with a name of Space Exploration Technologies to be making the most revenue from. They’re in good company, competing with Amazon, CoreWeave, Google, Microsoft, Nebius, and many other players for the same business. They just invested (through the X.ai acquisition) in more capacity than they could take advantage of to get there. Even if they manage to make a profit selling this capacity to Google, Anthropic, and others, it might not be enough to push them into profitability as a whole. That remains to be seen, and you keep asserting without evidence that it is true.
- cameldrv 4mo agoDo people think those numbers are correct? 920 million a month for 110,000 GPUs is $11.61 per GPU hour. That seems very high to me.
- spunker540 4mo agoI think in the case of supply-constrained GPUs, you can get the opposite of a volume discount. Google has the most capacity of anyone, the fact they’re paying so much per month to spacex is pretty remarkable
- bwfan123 4mo agoYou could also read it the other way. That there is a lot of stranded gpu-capacity which is not being allocated correctly. And buyers would rather rent - than build out themselves.
- SlinkyOnStairs 4mo agoThe contract has some clauses that lets Google pay less if SpaceX can't deliver the full amount of GPUs. But $12/hr is probably quite accurate. SpaceX' datacenters are horrifyingly expensive, and regular GPUs are being rented below cost in many cases. Just the gas turbine power alone is horrific. Doubles or triples the power bill and adds a big chunk of depreciation.
- yalogin 4mo agoSo space data centers are absolutely possible then. I heard a lot of skepticism about the feasibility but it looks like Google and Anthropic looked at SpaceX and trusted them to deliver on the promise and even signed deals worth billions.
- timy2shoes 4mo agoThey are paying for the existing earth-bound data centers SpaceXai owns.
- yalogin 4mo agoOh wow did not realize xai has data centers. So are they completely abandoning xai or do they just have that much capacity left over?
- etc-hosts 4mo agoThey have unused capacity in their Tennessee datacenter. We don't know everything but the backend of Grok probably runs in the TN datacenter. Grok is not as popular as hoped, so the TN datacenter has unused capacity. There are other companies besides Google and Anthropic that are considering renting capacity in xaispacex's datacenters. Global capacity for GPU hosting is tight at the moment. That TN DC is the only one not totally 110 percent already allocated for five years in the world .
- Havoc 4mo agoI guess their training runs aren't going great if they're dumping all the compute they can. Or I guess juicing the numbers for IPO
- fancyfredbot 4mo agoIn other news, the gold rush has entered a new phase as miners pivot to selling shovels.
- deleted 4mo ago[deleted]
- sam_bristow 4mo agoWait, are these the same GPUs that were diverted from Tesla into xAI a couple of years ago?
- etc-hosts 4mo agoThere may be a few here, but xaispacex has bought a very large amount of nvidia GPU since then for their TN datacenter .
- bigtex 4mo agoGoogle owns 5% of SpaceX fyi.
- amelius 4mo agoIf you can't buy DRAM, you gotta rent your compute infrastructure.
- cj 4mo agoWhat exactly is SpaceX's core business?
- cryo32 4mo agoSmoking crack and investment fraud. With a light sprinkling of space.
- deleted 4mo ago[deleted]
- diordiderot 4mo ago[flagged]
- hirako2000 4mo agoIts main business is connectivity. Starlink generated over 10B last year. Becoming a broader infrastructure company with xAI.
- ninkendo 4mo ago> Starlink generated over 10B last year An entire one-hundredth of their proposed valuation!
- diordiderot 4mo agoYeah, crazy for a company with nothing but the largest civilian satellite network and what amounts to a monopoly on space flight.
- ninkendo 4mo agoProfitability of space flight has a hard maximum. It’s not anywhere close to what their valuation would suggest. There’s a reason Elon keeps trying to get investors to believe his “data centers in space” lunacy, because you need that sort of magic pixie dust to justify why any of this valuation makes sense, let alone have anywhere to go but down.
- devops000 4mo ago“If we fail to deliver access to the committed amount of GPUs by September 30, 2026, then following a one-month grace period, Google may immediately terminate the agreement or accept the number of GPUs provided, with a corresponding pro rata reduction in the monthly fees. After December 31, 2026, the agreement may be terminated by either party upon 90 days' notice.” https://www.sec.gov/Archives/edgar/data/1181412/000162828026041150/spacexagreementfwp.htm https://www.sec.gov/Archives/edgar/data/1181412/000162828026... It’s only to boost the IPO price. The agreement will last only a few months on paper. I doubt it is a real transaction.
- ta988 4mo agoDidn't Anthropic pull the same in both ways? you pull me up I pull you up kind of deal? Sounds like SpaceX bought themselves some time up to Q4, which is not the case of Anthropic and even worse for OpenAI. Not counting that none of them got their S&P500 fast-track ticket.
- merlindru 4mo agowhy would Google help a competitor like that, though?
- somewhatgoated 4mo agoHow is Google competing with SpaceX?
- doubtfuluser 4mo agoThis feels actually like a pretty safe bet for Google, they secure the compute in case it works (I doubt that the described volume will be available in the near future), while if SpaceX doesn’t manage to provide there is not much loss. I see it more as another way of blowing up SpaceX valuation on paper…
- tosh 4mo agoIs there any data on whether Google, Amazon, Microsoft, Anthropic, OpenAI etc are most cost efficient in getting datacenter compute online and operating it? I'd be interested in how large the range is here across company and region and specific data center and how it relates to companies like Hetzner if at all.
- cyanydeez 4mo agothat's asking the cart before the horse; is there any data on what compute actually results in real GDP improvements?
- cryo32 4mo agoNothing other than vendor promises and white papers.
- deleted 4mo ago[deleted]
- sublimefire 4mo agoI’ve seen some numbers related to datacenters in Ireland and they would stress price per MW as a way to see where to build them. But then you have depreciation of equipment as well. Depreciation can be played with when filing taxes though.
- onlyrealcuzzo 4mo ago> Is there any data on whether Google, Amazon, Microsoft, Anthropic, OpenAI etc are most cost efficient in getting datacenter compute online and operating it? Well considering that ~80% of the price is hardware deprecation, I don't know why they'd be considerably worse than anyone else at negotiating hardware deals. Typically when you buy in bulk, you have more sway. Companies like Google also have in-house chips like TPUs that are substantially cheaper for inference for them to make than anyone else can get through Nvidia.
- YetAnotherNick 4mo agoI don't think they are most efficient for small GPUs. I think they might only be the one which have capex and certainty required for multimillion dollar purchase of GB200 NVL72 or something of that scale.
- Signez 4mo agoSorry, what? Does this mean that SpaceX are the only company that really did build some datacenters to put all the million of GPU/TPU/whatever they all talk about everyday? I mean, Google, Amazon, Meta and Microsoft told investors they spent more than $1B per day last year in CapEx... why on Earth do they (well, Google and Anthropic at least) need to rent compute to SpaceX, of all companies?
- phpnode 4mo agoThey overbuilt capacity for grok but no one wants to use grok for several reasons
- transcriptase 4mo agoYes but someone will be along shortly to defuse what sounds like giving the bad mars man credit where it’s due. Like everything else he does that works out, it was just luck, timing, actually a mistake that worked out, or someone else behind the scenes that he got lucky in hiring at the right time (by accident).
- supertroop 4mo agoIf he’s so smart why isn’t grok using all that capacity?
- transcriptase 4mo agoBuilding excess capacity from the start and selling it for a billion a month to constrained competitors. I only wish I could be so dumb.
- jeltz 4mo agoIf your dad had owned an emerald mine I am sure you could also have been that dumb. But to be more serious: It is impossible to say if this is good or bad for XAI without more numbers. What if they bought their compute way over market price and sell it at a loss?
- LightBug1 4mo ago[flagged]
- dang 4mo agoPlease don't do this here.
- dtj1123 4mo ago380 dollars per second... Good to know I could afford my own data center for an appreciable fraction of a minute.
- comboy 4mo agoplus $473 per second from Anthropic > As part of that deal, Anthropic agreed to pay SpaceX $1.25 billion per month through 2029 to rent all the available compute from its Colossus 1 data center near Memphis, Tennessee, that xAI — now part of SpaceX — originally built for its own artificial intelligence efforts. I don't get why SpaceX is going public. But anyway, well played, the whole crypto mining that dried out GPUs back in the day seems tiny now.
- dgellow 4mo ago> I don't get why SpaceX is going public. Liquidity for investors. They raised everything they could from private markets, government contract, debt, the remaining source of financing is from the public
- ignoramous 4mo agoFor context, Alphabet earns ~$12k/sec.
- jonas21 4mo agoWhy would you want to own your own giant datacenter? What would you do with it? Of course it's expensive to operate a datacenter that serves millions of people.
- dwroberts 4mo agoIs this admission that google’s proprietary chips etc. are not cutting it? Why would you need a bunch of nvidia GPUs if you have your own silicon? (AFAIK they have their own for both inference and training do they not?)
- throw1234567891 4mo agoIt could be, or simply we are so far away into chip shortage that even google needs to buy from other people’s pot.
- ben_w 4mo agoKinda; while it does show that overall Google's proprietary chips etc. are not cutting it, it doesn't say if the problem is the hardware itself or the factories to make more of the hardware. Without more information, it could be that Google's hardware is 100x the energy efficiency per token, but they can only make enough hardware for 1% of the tokens there's currently demand for: 1% of your product being 0.01% of your costs isn't nothing, but it leaves the other 99% at full price.
- amazingamazing 4mo agoHow do you come to this conclusion? All it means is that spacex has compute and google does not. Suppose tpus were theoretically a million times better, but cannot be produced due to supply chain constraints, this action would still be rational. My personal take is that this really shows how bottlenecked the entire supply chain is. For such an important commodity there are shockingly few players ready for scale.
- trebligdivad 4mo agoIt's a very long contract (till 2029) for just covering themselves for supply.
- fc417fc802 4mo ago3 years is quite a short horizon when it comes to semiconductor fabs. Also this article is a dupe, when it was previously discussed it surfaced that after some time either party can cancel with only 90 days notice.
- comboy 4mo agoGoogle renting infra from xAI, I did not see that coming. My understanding of what computers are doing, what companies are doing and what governments are doing seems to be getting worse day by day.
- ACCount37 4mo agoThey're struggling. The future needs more AI compute. No one has enough AI compute. Memory chip vendors are betting hard on this being a temporary state of affairs that doesn't last, and doesn't warrant commissioning a shitton of new memory foundries. Musk is betting hard on this staying that way, and is putting the next Colossus into the last place not corrupted by NIMBYs... SPACE!
- ajross 4mo ago> Google renting infra from xAI, I did not see that coming. Actually that seems to be fairly logical? Hardware is what xAI has, and it's in great demand. So sell what makes you money. The real story here is that that xAI hardware is going to be running Gemini and not Grok. Which is to say: Grok basically failed as a frontier AI and they need to pivot to a business model which makes money. Obviously not everything Musk did was wrong. xAI bought a ton of compute when it was possible to get it. But the product they were going to build with it failed and so now they're deciding to be a landlord. This IPO is just insane. No way do you justify a $trillion+ valuation based on what amounts to a bunch of commoditized rent seeking endeavors. Datacenters are buildings and chips, and everyone can build those. Starlink is just an ISP with lots of competition at scale (they have the high bandwidth mobile market cornered, but that's a very small market!). Mars is at best a grift on public funding. Even satellite launch services are commoditized and competetive these days.
- zozbot234 4mo ago> Which is to say: Grok basically failed as a frontier AI and they need to pivot to a business model which makes money. They can just run Grok as a local AI inside Tesla cars. It's actually really efficient as a compute platform because the Tesla cars are in motion at highway speeds, which gives you lots of free airflow for shedding waste heat via the car radiator. Way more efficient than trying to run AI on space satellites.
- est31 4mo agoThese deals are part of how the AI economy operates. Amodei has explained this in his recent Patel podcast. 1. Building datacenters takes time. Months, if not years. They take billions of investment. 2. AI revenue is highly unpredictable. Sure, you can make predictions, but maybe your competitor releases a better model 2 weeks after your release, maybe the new model you built isn't as much better, maybe the chinese models steal your show, etc. 3. AI revenue grows a lot. Anthropic's case is 10x per year. 4. So if you are off by just a year in terms of how much GPU you actually need, then that means a 90% of your compute capacity is wasted, and you go bankrupt. As a solution, companies buy compute from each other! If one company's model did well, they can buy compute from the company whose model didn't do well (like in the case of grok). It's beneficial for both sides, so positive sum game. So deals like this aren't something bad in itself. It's nothing new either. In SAAS deals, you often commit to a certain revenue and then pay extra if your revenue exceeds that amount. And power market is cut in two as well: longer term deals plus spot markets. Spot prices are way higher than the longer term deal prices. Given it's SpaceX of course there is financial engineering involved: the GPUs aren't actually owned by SpaceX but a daughter company, and it's been financed via loans that are backed by pension funds. So it's already the case that pension funds back bear the risks associated with SpaceX's operations. Right now, the bulk of the AI bubble sits in such debt statements and not in public markets.
- AustinDev 4mo ago> the GPUs aren't actually owned by SpaceX but a daughter company, and it's been financed via loans that are backed by pension funds. So it's already the case that pension funds back bear the risks associated with SpaceX's operations. I think a more accurate phrasing of the Valor GPU deal would be something like this: "SpaceX’s AI compute buildout relies in part on off-balance-sheet or lease-style financing vehicles. Valor-owned vehicles purchased Nvidia GPU infrastructure and leased it to xAI/SpaceX subsidiaries, with Apollo providing debt financing and SpaceX or subsidiaries guaranteeing some obligations. That creates indirect exposure for institutional and retirement capital, though not necessarily direct pension-fund ownership of SpaceX operational risk."
- arder 4mo agoThis is only a partial solution to a problem though. If x ai fails to build a good model they rent to Google. But that means all these companies are incentivised to build as much compute as possible. If they win their margins look great, if they lose they still make money. BUT at some point aggregate supply will outstrip aggregate demand and the bottom will fall out of the market.
- liveoneggs 4mo agoI knew GCP was third banana but what is even happening?
- tmountain 4mo agoA huge chunk of SoaceX value in their filing is attributed to their AI technology (aka Grok). I believe it’s 90% or more… Now, it seems they’re leasing the infrastructure required for Grok to scale to Anthropic and Google. I wonder how that math works…
- embedding-shape 4mo agoBut what is xAI? I thought that was the company that had the compute + Grok, the AI company? Since when does SpaceX (which I thought was a space company?) own AI-compute hardware and/or can do model hosting? Are all of Musks companies just one big thing now where the names no longer matter, or how is it supposed to work? Edit: seems I'm just a bit behind: "xAI — now part of SpaceX ", seems really strange for a space company to buy an AI company, but I guess rather that, than the other way around.
- peterspath 4mo agoNot really strange... if the goal is to go to mars, you probably need robots, those need intelligence -> ai. It fits pretty well, especially because you want to own all the core technologies as a company.
- thefounder 4mo agoWow…sounds like some kindergarten stuff
- embedding-shape 4mo agoWhy 4-5 companies instead of one then? I thought the goal of SpaceX was to get to Mars, why does xAI need to have that same goal? Or he didn't think xAI was suitable for that goal, then changed his mind so merged the companies?
- stuxnet79 4mo agoYou are overthinking this. The whole purpose of the SpaceX / xAI merger is for Musk to launder his failing companies to make them more palatable to the public. Not unlike the complex Mortgage Backed Securities of the GFC era which had a ton of low quality debt but yet were somehow assigned spotless credit ratings. Twitter is also being rolled up into SpaceX for the same reason.
- tristanj 4mo agoThis is a masterful piece of financial engineering by Google and SpaceX. Google purchased 10% of SpaceX over a decade ago. After dilution they probably own around 5%. SpaceX is valued at a whopping 94x revenue. This deal increases SpaceX's revenue by $11 billion per year. If SpaceX maintains this revenue multiplier, then this single deal boosts SpaceX's valuation by 94 x 11 billion = $1 trillion dollars. Google owns 5% of SpaceX, so they make 50 billion dollars. Google spends 10 billion and makes 50 billion, $40 billion profit. The even better part is that because of this deal, SpaceX is now profitable. The S&P requires companies to demonstrate 12 months of profits before they can enter the S&P 500 index. SpaceX lobbied to have this profitability requirement removed, but S&P said no and refused to rewrite the rules. Now with this incredible deal, SpaceX is now GAAP profitable under the existing rules, and they get to join the index next year without a rule change. Truly a brilliant deal for everyone involved.
- iririririr 4mo agowhy revenue that barely cover the estimated revenue (and depending on assets yet to be acquired) boost valuation? is everyone an idiot?
- lelanthran 4mo ago> SpaceX is trading at a whopping 94x revenue. This deal increases SpaceX's revenue by $11 billion per year. If SpaceX maintains this revenue multiplier, then the single deal boosts SpaceX's valuation by 94 x 11 billion = $1 trillion dollars. That final number doesn't make sense: if you're trading shares at $X revenue, increasing the revenue by $Y multiplier doesn't increase the share price by the same multiplier.
- adam12 4mo agoIt's all about the money.
- ggm 4mo agoWhen as appears inevitable Google decides to stop using this capability what will it do to the SpaceX stock value?
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- hsnewman 4mo agoBecause SpaceX has excess capacity.
- nickpsecurity 4mo agoCloud companies were made to sell others compute. Now, one is buying billions of compute from SpaceX, a rocket company. That sounds so backwards lol. Great work by Musk and his companies to be in a position to sell billions to cloud vendors. I'd have probably missed that opportunity while trying to build great rockets or AI models.
- toraway 4mo ago> while trying to build great rockets or AI models This deal was only possible because xAI isn't building great AI models with actual customers leaving most of their compute sitting unused.
- froggy 4mo agoSo Google AI will now be running partly on xAI data centers which run primarily on natural gas burned on site next to poor neighborhoods in Tennessee and Mississippi causing massive air pollution to these families and children. Is anyone else disgusted by this? I’m imagining all the people there developing lung and other issues because of this. Greed and power on full display over doing the right thing. I’ll be switching off the Gemini model at work (Composer’s been off since their xAI deal). This is the final straw for me to move completely off Google services.
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- runako 4mo agoSince the S-1 filing, xAI has taken over and is likely the largest share of revenue. I would estimate that ~95%+ of xAI revenue, and 100% of its profit, is from renting their datacenters. This is a datacenter REIT bolted onto a social media company bolted onto launch business bolted onto a niche ISP. The expected price to sales is ~100x. The best datacenter REITs trade at ~10x and pay a dividend, which SpaceX does not. Meta trades at ~7x sales. Comcast is one of the best-run ISPs, and it pays a 5.5% dividend on a stock trading at < 1x sales. To say SpaceX is overvalued is to even beginning to convey the magnitude of the situation. It's going to be very painful when the valuation normalizes.
- theturtletalks 4mo agoDo companies like Uber, Tesla, etc ever intend to pay dividends? If a stock never intends to pay dividends, the value of the stock is simply the price the next shumck is willing to pay.
- runako 4mo agoExcellent question. They may not intend, today, to pay dividends. However, the same question could have been asked about the successful tech companies of the '00s. Companies don't like to start paying dividends until they are fairly certain of their future profit stream and therefore ability to continue paying (and increasing) the dividends in the future. Apple, Oracle, Nvidia, Cisco, Alphabet, Meta, Salesforce, and Qualcomm all pay dividends now. It's not unreasonable to expect Uber and Tesla to pay in the future. However, the median time after IPO for similar companies to pay a dividend is close to 20 years. So we could expect Uber to perhaps wfstart paying sometime around 2039. Tesla...is Tesla so who knows?
- missedthecue 4mo agoThe value of the stock is your share in the underlying business. Because underlying business changes over time (hopefully for the better) you are not simply hoping another shmuck pays you more, like with tulips, whose underlying value does not change with time. You own a portion of a concern that is improving its own fortunes. Furthermore, dividends are approved by the board once per quarter or once per year. A dividend on a stock is not a contractual guarantee like it is on a bond. Therefore, it cannot be a basis of value. With your logic, Berkshire Hathaway is a long-running greater-fool tulip bubble whose shares are only bidded up by finding more shmucks.
- genghisjahn 4mo ago"It will have to be paid for," they said. "It isn't natural, and trouble will come of it!" Fellowship of the Ring.
- SoftTalker 4mo ago> $920 million per month from October 2026 through June 2029 for access to “approximately 110,000 NVIDIA GPUs, CPUs, memory, and other related components. That's about $8,400/month per "component" is that in the ballpark at all with what a month of dedicated/exclusive access to an NVIDIA GPU would go for?
- ww520 4mo agoPlus electricity, labor, and maintenance?
- Reubend 4mo agoYeah I was wondering about this too. It seems like way too much per GPU considering the purchase price of a B200 was around $40k last time I checked. So if we naively ignore the price of electricity and maintanence, it would only take 5 months before renting is a worse deal than buying outright.
- nrmitchi 4mo agoIt’s a supply and demand thing. Google would definitely be buying from nvidia and setting up themselves if nvidia had the capacity. SpaceX/xAi/musk are currently in a good market for “happening to own 100k cards we have nothing to do with”, and are exercising that control as hard as they can.
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- hijodelsol 4mo agoThat's roughly 11.66$ per hour per GPU, which is above the price that Google Cloud is reselling them at if you commit for 36 months: https://getdeploying.com/gpus/nvidia-b200 https://getdeploying.com/gpus/nvidia-b200
- owenthejumper 4mo agoYou guys don't understand. Banks like JPMC will make billions on this IPO. Doing everything to prop it
- kshacker 4mo agoMaybe that was the handshake deal from twitter financing, twitter exit and so on. "I will make you whole". I do not know, but I wonder if someone can tally the bankers from twitter buy, twitter merge into xAI and the new spaceX launch.
- owenthejumper 4mo agoDimon himself is inserting himself https://www.reuters.com/legal/transactional/jpmorgans-dimon-discuss-spacex-ipo-roadshow-with-ultra-rich-clients-bloomberg-2026-06-03/ https://www.reuters.com/legal/transactional/jpmorgans-dimon-...
- talbo888 4mo agoThese sort of numbers are really easy to estimate and it sounds like you haven’t done. For the sake of a reality check: IPO is raising approx $75bn of new equity SpaceX has negotiated substantially below market fee of 0.75% Total fee pool = ~550mio USD Fee pool will be split between 23 banks, so average of 23mio per bank, likely skewed heavily towards Goldman Sachs and Morgan Stanley as the lead bookrunners. Clearly everyone has incentives for spaceX to go up, but important to keep in mind the order of magnitudes we are talking about, the monthly google compute spend in the headline totally eclipses the one off banking fees
- l23k4 4mo agoWhy did you feel the need to post this disinformation? Do you get paid to spread these lies?
- raincole 4mo ago> If SpaceX maintains this revenue multiplier Yeah, if a ridiculous premise is given you'll reach a ridiculous result.
- tjwebbnorfolk 4mo agoIt's not that ridiculous considering these are the current facts on the ground.
- anjel 4mo agoSee also: "The Madness of Crowds" On Wall Street,people think they are betting on the fin performance of Companies, when in fact you are betting on the crowd's perception of a company's performance. Quite the abstraction.
- Lplololopo 4mo agoThe Facts: Tesla wasted billions for Cybertruck, hasn't had a new real model for years, promises Full Selfdriving without supervision for a decade and other companies are either on the same level or better. xAI has such a shitty AI, that he makes more profit renting his Compute instead of making profit directly from it as the companies doing who have better AI then him. Space-X is a limited business and he tries to make it unlimited by selling stories of Mars and dyson spheres (literaly), no one will ever finance or need as long as we have still desserts everywhere. In parallel his Starlink business gets competition left and right and despite this, he only has 10 Million customers AND increased prices for STarlink just last month or so. And the payload, most payload increase is only Starlink. He has to sell us a story, that suddenly even with Starship, he can send so much payload up there to make Space-X this mega trillion company. He can't even scale Starlink. Its expensive. The satelites work for 5 years and have limited capacity. He NEEDS Spaceship to be able to send up Starlink Server v3 and he hasn't even prooven he can get his ship back which he needs for the payload price. Twitter/X? Yeah he tanked that one. Optimus? When did you see the latest non faked demo? And while he works on it, we already have the market cornered here.
- hectdev 4mo ago
- emsign 4mo agoI'm curious if this offer lasts until after the IPO.
- mwkaufma 4mo ago$$ taking another circular financing lap.
- zxspectrum1982 4mo agoHow can SpaceX have so much GPU spare capacity? It doesn't make any sense. Did Musk blindly order humongous amounts of GPUs years ago before any of us had any sense of the scale this was going to reach?
- stogot 4mo agoThey acquired xAI
- zxspectrum1982 4mo agoso why did xAI acquire so many GPUs but have no use for them today?
- pjscott 4mo agoMusk made big investments in building AI data centers starting in 2024, continuing through the present. SpaceX got those assets from xAI, spun off from X, via an acquisition. More details: https://en.wikipedia.org/wiki/Colossus_(supercomputer) https://en.wikipedia.org/wiki/Colossus_(supercomputer)
- diziet_sma 4mo agoThat wikipedia page mentions SpaceX reached a deal to lease all of Colossus 1 to Anthropic: https://en.wikipedia.org/wiki/Colossus_(supercomputer)#cite_note-5 https://en.wikipedia.org/wiki/Colossus_(supercomputer)#cite_... So will SpaceX lease Colossus 2 to Google? If both Colossus datacenters are rented, will xAI have any compute?
- GMoromisato 4mo agoSpaceX valuation and ultimate success depends on two things: 1. AI demand continues to grow. 2. SpaceX's orbital data centers are profitable. If both of those are true, then their current valuation is absolutely justified. I'm confident #1 will happen. #2 is the big bet, and IMHO this is just an engineering/execution problem. All they need is (a) Starship to work reliably, and (b) a manufacturing line that can build a data center satellite at low cost.[1] (a) is the harder of the two, IMHO, but they are well on their way. Once they successfully recover and refly a Starship upper-stage, they will iterate step-by-step until launch costs drop to the level they need. Now assume that SpaceX succeeds. What if AI demand continues to grow and SpaceX orbital data centers are profitable? Think of their moat: they spent 10 years and billions of dollars developing a fully reusable rocket that happens to also be the largest rocket in the world, and that costs 1/10th of what other rockets cost (per kilo to orbit). Plus, they have an assembly line that can build data center satellites cheaply, and they start fabbing their own AI chips. How is anyone going to compete with that? There are a bunch of data-center-in-space startups, but none have their own rocket--they're going to have to pay SpaceX to launch them. Blue Origin is developing a rocket as large as Starship, but it's not fully reusable--they will never get the cost down to Starship levels. What's interesting is that all the AI companies, OpenAI, Anthropic, and even Microsoft and Google, are mostly leasing their data centers from someone else. They think compute is a commodity and the value is the trained model. But if SpaceX has the cheapest data center with the most capacity, they will be able to extract profits from the AI companies or (why not) compete against them with their own model (Grok). In 10 years we'll see whether SpaceX succeeds or fails. If they fail at this, they will retrench back to a launch company (assuming they are still in business). But if they succeed, they will be a massive company, and the synergy between their businesses will be so obvious that everyone will say, "of course they succeeded!" ---------------- [1] Don't be distracted by claims that "cooling in space is hard" or "radiation is a deal-breaker". Neither of those are insurmountable problems--they are just engineering problems. Crucially, they are problems that are easily solved by getting mass to space. If you can get mass to space cheap enough, those two problems are trivial to solve.
- positr0n 4mo agoEven if I do accept your claims that cooling in space is not insurmountable, you still would grant that launching and cooling (and shielding??) a data center in space still cost more dollars than building a data center on earth right? What is the use case that people will spend money to rent servers in space? I think nations have a strong enough grip on the internet now that the customer use case of "evading my country's laws" won't generate that much revenue. Is the hope that power will be cheaper because solar panels have direct and continuous exposure to the sun?
- highfrequency 4mo agoMakes a lot of sense that Musk should do the parts of the AI stack that look more like manufacturing/regulatory bottlenecks, and rent out the compute to research-focused AI labs. Does anyone know the full accounting of how much it cost to build Colossus (plus ongoing opex) vs. the revenue it's generating now?
- BLKNSLVR 4mo agoAnd SpaceX will spend $800M per month on Nvidia hardware purchase contacts, and Nvidia will spend $700M per month on Google services. I'm picturing a teenager blowing a bubble gum bubble bigger and bigger. I assume it can go on forever!
- vdfs 4mo agoA bubble will never pop as long as stay in it's bubble form
- manmal 4mo agoUsually there’s some environmental disturbance eventually, that makes it burst.
- Waterluvian 4mo agoSo… data centres in space it is.
- credit_guy 4mo agoThe doubt you are expressing was very justified until this week. But on June 1st, Microsoft changed the pricing for business and enterprise Copilot, and people started paying real money for using AI. Until that day, Github Copilot was charging users 4 cents per request (if they exceeded their subscription's monthly limit). Now, they charge at the API rate. I monitor my usage, and it's easily 10 times more expensive than the 4 cents per request before, maybe 20 or even more. And guess what? Businesses are shocked about the changes, and thinking hard what to do, but most of them will just pay 10 or 20 times or more for AI than they used to pay until now. We will hear projections soon, in a few months, but my guess is that the big 3 (Anthropic, OpenAI, Google) will get of the order of $10 billion per month in AI inference revenues. And it will only go up from there.
- layoric 4mo agoWhat makes you think “most of them will just pay 10 or 20 times more for AI”? They can’t measure ROI, and it will start costing more than their staff. You might be right, but I can’t think why any competent C suit would agree to this..
- mococa 4mo agoEven Google does not use GCP…
- wolttam 4mo agoThat's... $12.50/hr per GPU. WTF?
- pjscott 4mo agoFrom Google's spokesperson, quoted in the article: "This is a short-term, timely agreement to ensure we have bridge capacity to meet surging customer demand for our agent platform, Gemini Enterprise, which has been even higher than we expected." Google wants a lot of compute sooner rather than later, and they're willing to pay a premium for speedy delivery of that compute. SpaceX has the capacity already built and ready to go. Hence the high price.
- semessier 4mo agothe GPU builds are very high stakes games of depreciation: if the mission life is e.g. 4 years you win, if a disrupting ASIC for the transformer comes in you lose. As of today the gamblers seem to win, demand even for A100s, H100s is high prices are even rising.
- ethagnawl 4mo agoWe're all going to end up as Elon's serfs, aren't we?
- softwaredoug 4mo ago> compute from its Colossus 1 data center near Memphis, Tennessee, that xAI — now part of SpaceX — originally built for its own artificial intelligence efforts. Is this the same Memphis data center notorious for burning jet fuel nonstop for power?
- prism56 4mo agoNot surprised. I work in the gas turbine market and this AI boom has revolutionised our business and investments, oil and gas is dead. (to us)
- polski-g 4mo agoWhat would you prefer it to burn instead?
- margalabargala 4mo agoI'd prefer it to absorb photons and wind kinetic energy, and store it in lithium batteries.
- liveoneggs 4mo agoprobably boiling water with nuclear energy?
- polski-g 4mo agoThey might do that in 16 years when the next reactor comes online.
- wigster 4mo agothe road goes ever on and on. what a crock
- megadragon9 4mo agolooks like elon web services (EWS) is the master plan all along :D
- politelemon 4mo agoEverything will run on Elon's Costly Compute servers.
- arjunchint 4mo agoI am really wondering if Google is just subleasing Anthropic capacity. The terms are suspiciously the same as Anthropic's and Anthropic was supposed to have leased out all of Colossus 1. Maybe with the corp token spending limits and the rise of codex, Anthropic saw steep deceleration in usuage?
- le-mark 4mo agoThat plus sota model regressions. When they’re public we’ll see the numbers at least.
- dev1ycan 4mo agoThis is such a disgusting economy
- chiph 4mo agoGoogle has code written for their Tensor processors (TPU). Will it run on the NVidia GPUs that xAI has? Because I'm thinking they're "not part of their core architecture" and it will thus be money wasted. (I thought for sure the title was backwards - it's a strange world)
- sipjca 4mo agoinference code is effectively trivial to port at this time everyone understands cuda well enough anyway
- KnuthIsGod 4mo agoSo now Google is supporting fascism...
- hoppyhoppy2 4mo agoGoogle had already donated $1 million to Trump's second-term inauguration fund.
- cooper_ganglia 4mo ago[dead]
- BobbyTables2 4mo agoI serious doubt Google is doing this for the spare datacenter capacity. This is a ridiculous amount of money. Have to believe a non-tech company could hire an entire team/company to build datacenters for this kind of money. Make no mistake - this has to be “do evil” territory.
- _HMCB_ 4mo agoThat’s a lot of moolah.
- latentframe 4mo agoAll important technologic revolution can turn into an infrastructure revolution => the railroads, electricity etc … so the technology can be a transformation while the capital cycle becomes in excess
- whatever1 4mo agoThe Ponzi scheme that Elon has set up is one for the books. Fail forward. Unbelievable skill.
- mikewarot 4mo agoThe agreement in question is quite short[1], and includes no penalties for failure to provide the required compute amount other than pro-rating things. There's nothing in this that you couldn't sign even if you had no GPUs to offer Google. I'm not a lawyer, but it seems to me that this is like Google agreeing to buy a billion dollars of lemonade from Tim's lemonade stand, Inc, and Tim is 8 years old. I don't see how this provides any cover to xAI/SpaceX as far as SEC rules go for getting into the top 100 stock index. [1] https://www.sec.gov/Archives/edgar/data/1181412/000162828026041150/spacexagreementfwp.htm https://www.sec.gov/Archives/edgar/data/1181412/000162828026...
- zerop 4mo agoNeither Nvidia nor xAI owns those chips on paper. Valor, the shell company holds legal title. https://x.com/BullTheoryio/status/2061029970236133554 https://x.com/BullTheoryio/status/2061029970236133554
- sarjann 4mo agoMy understanding is google owns a pretty decent stake in spacex (around 6% end of 2025). Booking revenue now will probably help Spacex's valuation.
- effnorwood 4mo agohow many ads per month is that?
- burnerRhodov3 4mo agoat 2.4B a month they get buyback on both C1 and C2 in one year... or, over the useful life of their datacenters (around 7-10 years before swapping to latest tech) they will make around $201B-$288B off these two deals alone. Elon is the greatest capital allocator of all time.
- FireInthepants 4mo agoWhere is their TPU? So why GPU now?