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But Google loses $11 billion per year, and they gain $50 billion... in stock? As far as I know they really will be paying $11 billion annually in liquid cash t

But Google loses $11 billion per year, and they gain $50 billion... in stock? As far as I know they really will be paying $11 billion annually in liquid cash to SpaceX (not a small ask) starting this year, and all they get in return is more money on paper? What incentive do they have to help SpaceX out like this at great cost, if they're not actually buying something valuable? Why are they incentivized to do this if it's just an empty deal and financial engineering? Genuine, good faith question: what are they getting out of this?

simonebrunozzi 4mo ago
I would bet that there is a nice clause in that contract that gives exit options to Google at year 1, 1.5, 2, etc. Perhaps they only need to pay $11B, or $16.5B, before exiting the contract. Plus, instead of getting nothing for these $11B/year, they surely get some compute power that should have some value.
- manlymuppet 4mo ago
  That's what I'm saying though. They must be getting something out of this deal, otherwise why would they be going through with it? The explanation that this is just financial engineering (which to me, means neither Google nor SpaceX is getting anything out of this other than looking better on paper) doesn't make sense to me. How does this financial engineering benefit Google? Even if they have an exit option, why is Google (a private, separate, self-interested firm) giving a single dollar to SpaceX if the deal isn't mutually beneficial?
  - tristanj 4mo ago
    Because Google owns a sizable stake of SpaceX, and for every $1 they give SpaceX they get $5 in investment return.
    - manlymuppet 4mo ago
      That $5 return doesn't actually materialize the way you're framing it. Even if your 94x multiple held perfectly (a big if), Google's "return" here is unrealized appreciation on an illiquid, minority stake. They can't spend it. And if they try to sell post-IPO, the act of selling a large block would push the price down, shrinking the very gains you're describing. Meanwhile, the $11B/year in cash going out the door is very real and liquid and hits Google's income statement immediately. So the actual trade is: guaranteed cash expense now, in exchange for speculative paper gains later on a stake they can't easily exit. Even if you assume bad faith on Google's part here, no CFO in their right mind would see this situation as an easy 5:1 return. The simpler explanation is the one Google gave: they need bridge compute capacity because Gemini Enterprise demand is outrunning their own datacenter buildout, and SpaceX has 110K GPUs available now.
  - JumpCrisscross 4mo ago
    > must be getting something out of this deal They’re getting compute. There was a free for all period when xAI did one smart thing and that’s build like there’s no tomorrow. Because tomorrow is today, and today jurisdictions are racing to pause datacenter construction.
    - manlymuppet 4mo ago
      I agree with you--this is my whole point. This deal can't just be financial engineering, since that wouldn't make sense. They must be getting something out of this, i.e. compute. Google is buying compute because they need it. That explanation works a lot better to me than one where Google is doing this purely for unrealized future gains on a minority stake in SpaceX.
      - JumpCrisscross 4mo ago
        > Google is buying compute because they need it The fact that Google owns a stake in SpaceX doesn't hurt. But the multiple math is specious, and profitability math plain wrong.
    - notahacker 4mo ago
      yeah the ironic thing is if the parties involved were bullish on xAI winning or near term ODCs undercutting compute costs this deal wouldn't have been attractive. But as it is, Google probably only slightly overpays for boring ground-based datacenter space they actually need to hit internal goals, and it looks even better if IPO investors in a stock they hold pick up some of the the tab.
- dmix 4mo ago
  So you think Google is going to spend $11B in hopes it will boost the value of the SpaceX stock, while pretending to public investors it's a multi-year thing, and then after 1yr sell off their SpaceX stock after the value rises while also ending the contract early? This site is turning into conspiracy central
  - krupan 4mo ago
    I can't imagine why so many people would be looking for conspiracies now days /s
  - notatoad 4mo ago
    they're spending $11B on compute because they need the compute and that's the market rate for it. it's the same price Anthropic is paying to spacex for compute. but if they boost the spacex stock for the right amount of time, they can get that compute for free instead of for $11B. Google's own announcement of the deal frames it as a short-term agreement while they scale up their own datacenter capacity.
- notatoad 4mo ago
  >I would bet that there is a nice clause in that contract that gives exit options to Google from the linked article >After this year, the agreement can be terminated by either party provided they give 90 days’ notice.
tristanj 4mo ago
The contract has an exit clause, either side can terminate the agreement with 90 days notice. I do not expect this contract to last the full 3-year term. And this deal protects Google's investment. Google owns close to $100 billion of SpaceX stock. This deal increases SpaceX's revenue by 30%, and pushes SpaceX into profitability. With this deal, SpaceX is eligible for S&P inclusion. Assuming $6-7 trillion in S&P 500 tracked funds, and a 1% SpaceX weight after a year, this is $600-700 billion in demand for SpaceX stock. It means Google now has someone to unload its position off to. This play directly protects Google's investments.
- sirsinsalot 4mo ago
  Not doing much to beat the accusations of circular dealing are they?
- otterley 4mo ago
  > This deal increases SpaceX's revenue by 30%, and pushes SpaceX into profitability. With this deal, SpaceX is eligible for S&P inclusion. You keep saying this even though you don’t present any evidence that it will make SpaceX profitable. Where are your numbers?
  - tristanj 4mo ago
    SpaceX announced $26B/year in compute deals with Anthropic and Google in the past week. The margins on both deals are incredibly high, Google is paying around $11.75/hour per GPU. Infrastructure costs are far below that, SpaceX likely has 70-90% margins. These two deals are around $20B/year profit. In the preliminary S-1, SpaceX reported a $5B loss in 2025. Combining these numbers, that's a $15B profit, assuming losses are constant. Likely expenditures will increase, but even if losses double, that's a very healthy $10B profit.
    - adestefan 4mo ago
      And Google will exit at 12 months when the S&P seasoning period and 4 quarters of profitability are satisfied.
nouveaux 4mo ago
They're buying compute for 11 billion and the 50 billion in stock growth is a bonus if it happens.
s1artibartfast 4mo ago
They also get compute, which has real value. If you are going to spend 11B on new data centers or rental, better to spend with a a company you are about to ipo. Either way, 500% return on the spend would be amazing

simonebrunozzi 4mo ago

I would bet that there is a nice clause in that contract that gives exit options to Google at year 1, 1.5, 2, etc. Perhaps they only need to pay $11B, or $16.5B, before exiting the contract. Plus, instead of getting nothing for these $11B/year, they surely get some compute power that should have some value.

manlymuppet 4mo ago
That's what I'm saying though. They must be getting something out of this deal, otherwise why would they be going through with it? The explanation that this is just financial engineering (which to me, means neither Google nor SpaceX is getting anything out of this other than looking better on paper) doesn't make sense to me. How does this financial engineering benefit Google? Even if they have an exit option, why is Google (a private, separate, self-interested firm) giving a single dollar to SpaceX if the deal isn't mutually beneficial?
- tristanj 4mo ago
  Because Google owns a sizable stake of SpaceX, and for every $1 they give SpaceX they get $5 in investment return.
  - manlymuppet 4mo ago
    That $5 return doesn't actually materialize the way you're framing it. Even if your 94x multiple held perfectly (a big if), Google's "return" here is unrealized appreciation on an illiquid, minority stake. They can't spend it. And if they try to sell post-IPO, the act of selling a large block would push the price down, shrinking the very gains you're describing. Meanwhile, the $11B/year in cash going out the door is very real and liquid and hits Google's income statement immediately. So the actual trade is: guaranteed cash expense now, in exchange for speculative paper gains later on a stake they can't easily exit. Even if you assume bad faith on Google's part here, no CFO in their right mind would see this situation as an easy 5:1 return. The simpler explanation is the one Google gave: they need bridge compute capacity because Gemini Enterprise demand is outrunning their own datacenter buildout, and SpaceX has 110K GPUs available now.
- JumpCrisscross 4mo ago
  > must be getting something out of this deal They’re getting compute. There was a free for all period when xAI did one smart thing and that’s build like there’s no tomorrow. Because tomorrow is today, and today jurisdictions are racing to pause datacenter construction.
  - manlymuppet 4mo ago
    I agree with you--this is my whole point. This deal can't just be financial engineering, since that wouldn't make sense. They must be getting something out of this, i.e. compute. Google is buying compute because they need it. That explanation works a lot better to me than one where Google is doing this purely for unrealized future gains on a minority stake in SpaceX.
    - JumpCrisscross 4mo ago
      > Google is buying compute because they need it The fact that Google owns a stake in SpaceX doesn't hurt. But the multiple math is specious, and profitability math plain wrong.
  - notahacker 4mo ago
    yeah the ironic thing is if the parties involved were bullish on xAI winning or near term ODCs undercutting compute costs this deal wouldn't have been attractive. But as it is, Google probably only slightly overpays for boring ground-based datacenter space they actually need to hit internal goals, and it looks even better if IPO investors in a stock they hold pick up some of the the tab.
dmix 4mo ago
So you think Google is going to spend $11B in hopes it will boost the value of the SpaceX stock, while pretending to public investors it's a multi-year thing, and then after 1yr sell off their SpaceX stock after the value rises while also ending the contract early? This site is turning into conspiracy central
- krupan 4mo ago
  I can't imagine why so many people would be looking for conspiracies now days /s
- notatoad 4mo ago
  they're spending $11B on compute because they need the compute and that's the market rate for it. it's the same price Anthropic is paying to spacex for compute. but if they boost the spacex stock for the right amount of time, they can get that compute for free instead of for $11B. Google's own announcement of the deal frames it as a short-term agreement while they scale up their own datacenter capacity.
notatoad 4mo ago
>I would bet that there is a nice clause in that contract that gives exit options to Google from the linked article >After this year, the agreement can be terminated by either party provided they give 90 days’ notice.

tristanj 4mo ago

The contract has an exit clause, either side can terminate the agreement with 90 days notice. I do not expect this contract to last the full 3-year term. And this deal protects Google's investment. Google owns close to $100 billion of SpaceX stock. This deal increases SpaceX's revenue by 30%, and pushes SpaceX into profitability. With this deal, SpaceX is eligible for S&P inclusion. Assuming $6-7 trillion in S&P 500 tracked funds, and a 1% SpaceX weight after a year, this is $600-700 billion in demand for SpaceX stock. It means Google now has someone to unload its position off to. This play directly protects Google's investments.

sirsinsalot 4mo ago
Not doing much to beat the accusations of circular dealing are they?
otterley 4mo ago
> This deal increases SpaceX's revenue by 30%, and pushes SpaceX into profitability. With this deal, SpaceX is eligible for S&P inclusion. You keep saying this even though you don’t present any evidence that it will make SpaceX profitable. Where are your numbers?
- tristanj 4mo ago
  SpaceX announced $26B/year in compute deals with Anthropic and Google in the past week. The margins on both deals are incredibly high, Google is paying around $11.75/hour per GPU. Infrastructure costs are far below that, SpaceX likely has 70-90% margins. These two deals are around $20B/year profit. In the preliminary S-1, SpaceX reported a $5B loss in 2025. Combining these numbers, that's a $15B profit, assuming losses are constant. Likely expenditures will increase, but even if losses double, that's a very healthy $10B profit.
  - adestefan 4mo ago
    And Google will exit at 12 months when the S&P seasoning period and 4 quarters of profitability are satisfied.

nouveaux 4mo ago

They're buying compute for 11 billion and the 50 billion in stock growth is a bonus if it happens.

s1artibartfast 4mo ago

They also get compute, which has real value. If you are going to spend 11B on new data centers or rental, better to spend with a a company you are about to ipo. Either way, 500% return on the spend would be amazing