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xAI is looking more like a datacentre REIT than a frontier lab
- mandeepj 4mo agoor, could be they pivoted to cover the expenses?
- hawkice 4mo agoThey have developed an LLM, so they are an AI lab, but the quality of that model suggests they're not a frontier anything.
- gowld 4mo agoI am also an "AI lab", but I look more like a corporate cog, because that's where most of my revenue comes from and how I spend the most my time.
- beepbopboopp 4mo agoOr the model was a marketing expense to capitalize the data center model. Im not saying it was intentionally that, but its been an effective "that."
- bpodgursky 4mo agoEh. It was a leading model for a few weeks, it was a real effort, but they never built a real revenue model around it. It wasn't SaaS, it wasn't for governments, it couldn't get B2C payments. Made it hard to justify the training cost to stay at the frontier.
- dsgn93 4mo ago[flagged]
- Qhemlomo 4mo agoSo like the 4D Chess Trump is playing with us? Come on, the most logical thing is that Musk overestimated the compute he needs and got lucky with the secondary usage of it. As soon as the IPO is done and if it didn't fail, he will buy curser and try to push again if he hasn't given up on it. He also needs some compute for the robotics stuff and for Tesla in-car entertainment and for training FSD.
- bottlepalm 4mo agoGrok isn't at the front of the frontier, but they are there for sure.
- grim_io 4mo agoAs much as the Chinese models, so not at all.
- leetharris 4mo agoI have the pro account for ChatGPT, Claude, Gemini, and Grok. They all have various strengths and weaknesses. My favorite is still ChatGPT, then Gemini/Claude, then Grok. Grok often feels 1-2 generations behind the competition in general use, but it has three things that I love: 1. It seems to be the best at understanding current events. Maybe due to X integration, or some other tool call optimization in the backend? I don't know, but I often ask about things going on, and the other models have outdated info, give unhelpful answers, etc. 2. It is generally the least sycophantic for personal things. Anthropic is getting here too. ChatGPT and Gemini are working on this, but previous models in those families would almost never say anything negative about what I am doing. Sometimes I need career advice, personal advice, etc and I like the tone of how it responds. I think Claude will be caught up soon. 3. For professional work, there are certain topics that other models would refuse to engage with. At my last company we had an enormous amount of legal users. When a deposition would need a summary on certain topics, most models would refuse. Grok would not. I understand the need for safety and I don't blame the other model providers, but for some professional use cases you NEED a model that is capable of handling sensitive subjects.
- epolanski 4mo agoMy SO works in audit/compliance and business Gemini definitely does not refuse to answer.
- e9 4mo agoI recently worked with NRC dataset, specifically about nuclear reactor events and status reports(example: https://www.nrc.gov/reading-rm/doc-collections/event-status/event/en https://www.nrc.gov/reading-rm/doc-collections/event-status/...). Public data that just needed some cleaning. Several time Claude API would refuse to engage. Because of that I can't trust Claude to clean production data sets.
- Azantys 4mo agoCareer and personal advice from LLMs, not sure if thats your best bet
- deaton 4mo agoAll 4 of these still regularly insist that I am a genius and everything I say is brilliant. Grok definitely pushes back more than the others, but I don't like how sycophantic they all still are.
- throwaway67678 4mo ago[flagged]
- plaidthunder 4mo agoIt's a general problem of defining yourself in negative terms. Being "un-{thing I don't like}" doesn't say what you are. It only excludes one possibility while leaving behind an infinitude of mostly crappy alternatives to try to choose from. Having a positive set of beliefs annoys people and and can make them feel judged, but at least it provides a vector that points somewhere definite in possibility space.
- fooker 4mo ago> the quality of that model I guess the benchmarks disagree, but whenever I need to find specific information that does not easily show up with a web search, I try chatgpt, gemini and grok. Grok surfaces what I was looking for more often than the others. Things like "find the github repo from 2017 that does $vague_thing".
- chatmasta 4mo agoGrok does seem to have the best searching capabilities, and not just for twitter. I wonder what search engine they’re using on the backend.
- PixyMisa 4mo agoGood question. You can actually see the searches it runs (momentarily) so testing could determine if it's using public search engines or a private system.
- Azantys 4mo agoIsnt that more Perplexitys thing anyways?
- gowld 4mo agoCan you give a specific example (that doesn't violate any privacy you want to protect)?
- PixyMisa 4mo agoI find that too. I use Claude for coding but when I need to dig out something based on limited data I turn to Grok and it delivers.
- mbesto 4mo agoAnd they are planning (well "planning" if you believe Elon) to start building their LLM over from scratch, which means they need a HUGE ass training data center, i.e. not a data center for inference to do so.
- harrall 4mo agoBut supposedly they’re the cheapest for certain workloads, especially ones that have high tokens and can make use of caching. So they’re cutting edge in that way.
- TSiege 4mo ago> And Google is a major shareholder in SpaceX, so they certainly have incentive to juice the valuation of the IPO. Google own 5-6% of the shares of SpaceX. SpaceX is seeking a valuation of $1.77T which means Google's shares would be worth $88.5B-$106.2B. I'm not a skeptic of AI/LLMs but this makes me deeply suspicious of these circular deals. What happens when the music stops?
- AznHisoka 4mo agoSomeone gets bailed out and the cycle starts again. Isnt this how it works?
- downrightmike 4mo agoHyperinflation to make the needed bailout money
- staplers 4mo agoThat's done quietly behind the scenes so leaders can blame something else for inflation. See "M2SL" or "TOTBKCR" on tradingview if you want to see inflation live.
- drivebyhooting 4mo agoI don’t understand how to read those charts.
- smallmancontrov 4mo agoAny time you see a price denominated in $, divide by that chart.
- stymaar 4mo agoThe idea that inflation and the money supply are linked is one of the most dumb one in folk economics. Just look at these charts: they were declining when inflation was raging on in 2022-23 …
- HoldOnAMinute 4mo agoTechnology has a very short life. The difference is that a REIT might contain an office buildings that can be used for any business, but a data center is filled with carcasses that start rotting and stinking from the day of installation.
- skybrian 4mo agoNo, that's silly. Chips don't rot like produce. Some components will go bad and will need to be replaced. The owner can choose how fast to replace them depending on how prices look in a few years. The rest of the building (including things like power) will still be useful.
- chasd00 4mo agoi think what op meant is they're instantly out of date. You're not going to be able replace every GPU in your datacenter on every new release from Nvidia and customers are going to go to whoever has the highest performing gear.
- JumpCrisscross 4mo ago> customers are going to go to whoever has the highest performing gear This is where we lack data. I’m skeptical of the claim. If anything will force retirement of old chips, it will be power efficiency, not customers being picky amidst a chip shortage.
- joefourier 4mo agoDemand is so high and supply so low customers will go to anyone that has any gear, period. Anthropic is paying xAI for GPUs from 2022, not the latest Nvidia release.
- megaman821 4mo agoThe idea that the AI data centers would depreciate in just a few years is plain wrong. The argument was that new chips would be so much more powerful and efficient that it would be cheaper to buy and operate the new chips than to just operate the old chips. Except that demand is significantly outpacing new chip manufacturing, and until it catches up years and years from now, the efficiency argument doesn't matter at all.
- 9cb14c1ec0 4mo agoSo we know what they are renting these GPUs for. I'm really curious about the input costs of their power generation. Is there actually enough margin in these deals for xAI to cover their depreciation cost? Edit: from the footnotes: > Colossus actually runs largely on its own on-site gas turbines, which comes out even cheaper: at a simple-cycle heat rate of ~10,000 Btu/kWh and Henry Hub gas at ~$3.50/MMBtu, the fuel bill is only around $90mn a year. OK, that's crazy. How can I get into renting GPUs to hyperscalers?
- eqmvii 4mo agoI think the hard part is acquiring the GPUs, first at all, then at any reasonable price.
- trenchgun 4mo agoYes, and then you need to have the datacenter. Do you get a permit? How long does it take to build it?
- deleted 4mo ago[deleted]
- mNovak 4mo agoAlso gas turbines are on backorder until 2029, and new grid connection queues on a similar timescale. Hence why all the bitcoin miners are cashing in (or trying to) by converting their facilities to datacenters.
- 4mo ago
- xnx 4mo agoSame idea expressed by a commenter here 2 days ago: https://news.ycombinator.com/item?id=48426082 https://news.ycombinator.com/item?id=48426082
- aurareturn 4mo agoI'll add that I said xAI seems to be dropping out of the AGI race: https://news.ycombinator.com/item?id=48214042 https://news.ycombinator.com/item?id=48214042 Makes sense. Very difficult to catch OpenAI and Anthropic now since their flywheel of generate revenue, use revenue to buy more compute, train a smarter model with more compute, made it hard to compete. Being able to supply compute makes more sense for SpaceXAI if you can't compete in SOTA LLMs anymore.
- xnx 4mo agoHow long until Meta figures this out?
- aurareturn 4mo agoI don't think Meta has to. They have far bigger distribution than X.com. I think they'll be able to make use of their data centers better than xAI.
- deleted 4mo ago[deleted]
- declan_roberts 4mo agoAs an investor it's really important for me to see this kind of bearish sentiment widely. It's actually a positive for the stock in my opinion, not a negative.
- mcmcmc 4mo agoThose are the worlds of a cult member, not someone who makes responsible financial decisions. I hope you don’t have anyone depending on you
- deaton 4mo agoIt makes sense. They've long since fallen behind the big 3 in quality of their models. There's no good reason at this point to keep burning money on Grok rather than making back some of that money renting out their Colossus data center.
- deleted 4mo ago[deleted]
- hmontazeri 4mo ago> While this doesn't include opex[2] and depreciation, if the deals continue for 18 months, xAI recoups all the capex they spent and still has many hundreds of MW of GPUs available. With the giant compute shortages likely to persist into the medium term, even older H100s are likely to be extremely useful even 18 months out. if the bubble doesn't burst until then...
- john_strinlai 4mo agofor people, like me, who aren't familiar with the acronym: REIT = real estate investment trust
- throwaway5752 4mo agoxAI is more than half of SpaceX revenue with the Google sublease. SpaceX is looking like a datacenter REIT. Moreover they're leasing compute - the actual infra around it is much less important - and how long does anyone expect heavily utilized GPUs to run? How likely is SpaceX to be able to re-lease this compute capacity? It will be broken down or out of date in 2-3 years. This should be essentially ignored in the long term for SpaceX business prospects, and is low margin business that barely justifies a 10x earnings multiple let along a 100 revenue multiple for the xAI unit.
- trothamel 4mo agoI suspect that this is the start of a play for SpaceX's orbital datacenter project - if they're really planning on launching as many satellites as they've said (and Starship is going to massively lower the cost of launch), they won't be able to fill them with Grok. So perhaps it's best to become the infrastructure provider to the other AI Labs.
- 542458 4mo agoIs there anything to read on how the economics of an orbital datacenter make any sense? Because I don't really see how blasting a server into space solves any of the typical issues associated with datacentres beyond easier access to solar.
- rcpt 4mo agoI think the only way it makes sense is if local busybodies succeed in banning data centers from the ground.
- Tycho 4mo agoThe idea is that eventually the power demand for AI compute will be too great to satisfy by terrestrial means.
- JumpCrisscross 4mo ago> anything to read on how the economics of an orbital datacenter make any sense? I'll do a write-up at some point. But the core drivers are launch cost, permitting delays for terrestrial datacentres and interest rates. The balance is between, on one hand, the financing cost of the permiting delays against, on the other hand, the cost of launching radiators. (Chips are light. Solar panels without glass cladding are surprisingly light, too. The weight of an orbital datacenter is almost entirely in its radiator.) The math high-level works with Starship (6 flights/year), 3+ year financing delays and a 10 kg/kW radeiator (assuming 6% financing cost). Of course, there are devils upon devils in the details. But directionally, we're seeing pushback against terrestrial datacenters. And from what I can tell, advanced heat pipes may be the unlock to get radiators down to 5 to 6 kg/kW, at which point I think even New Glenn's $300/kg projected prices become competitive. It all goes out the window if launch costs don't come down, interest rates go above 10%, terrestrial datacenters start getting built quicker, or demand for this category of compute collapses.
- zoogeny 4mo agoIf xAI is a datacenter REIT, it is a special kind that has a promise that no other datacenter provider could dream of: LEO datacenters. As far-fetched as that may sound, the biggest profit center for SpaceX in my understanding was Starlink. xAI already has extremely high-bandwidth connections from Earth to LEO available. Connecting that to solar powered orbital datacenters seems doable in realistic timeframes, especially once Starship comes online and gives them a significant boost in launch capacity. If that ends up being viable and profitable, there is no realistic competition for decades. In this view, xAI earning a reputation as a reliable AI hyperscaler is just another tactic in that strategy.
- martinky24 4mo agoYou're hand waving the whole "data center" part away. Comms is one thing. That's probably 1% of the challenge.
- zoogeny 4mo agoSure, but considering the size of the challenge it makes sense to figure out the parts that can be studied on the surface first. Challenges like procuring, challenges like setting up relationships with potential customers. You probably want to figure out everything you can so that when you move on to the hard part you aren't distracted by the rest. Consider the alternative. SpaceX figures out how to build the datacenter in space thing but fails at the rest. That would be an expensive mistake.
- LearnYouALisp 4mo agoCost per pound? Then $/Watts/TFLOPS minus cost per pound? Out of curiosity (since I basically never saw $/lb mentioned in any replies anywhere on this, which is hilarious; like talking about having your grain mill at 10,000ft/in the mountains since sunlight is better there): Have you ever tried a forSpace Program? (And not only 100mi or more above, they're 17,500 mph faster--Mach 22 Datacenters in an oxygen-free, higher-radiation, insulated environment with absolutely no resources)
- 4mo ago
- nonethewiser 4mo agoWeren't we just talking about how SpaceX is valued based on some profits from starlink + tons of speculation? Yet when we learn of this new $26B in yearly revenue (2.2B/month from Google and Anthropic)the conversation does not return to that discussion. It transforms into: "xAI's tech sucks" "Google/SpaceX is Structurally Bad for the Economy" etc This is called motivated reasoning. We get new information and instead of the obvious thing, updating prior conclusions, we just find a different way to react negatively. The negative reaction will be achieved. The narrative here is completely polluted by people who dislike Elon/SpaceX.
- chris_money202 4mo agoThink two things can be true at once. They should be using their capital to achieve their speculative price. Instead, they are using their capital to achieve a modest ROI, thus invalidating the speculation AND proving they have tech issues in what the speculation is around.
- bpodgursky 4mo agoThey are making $24B/yr on datacenters they built in < 2 years for $2-3B. To call that a "modest ROI" is... quite a statement.
- throwaway5752 4mo agoThere is a shortage, they are short lived assets. It's a blip and unrelated to their long term profitability and valuation. They can't make a long lived business of building and renting out compute at those margins. It was definitely a smart business move. It should be troubling to any shareholder than xAI is unable to utilize this infrastructure as renting it out to competitors.
- gunapologist99 4mo agoBetter not mention your theory to all the other Tier 1 data centers. Or maybe you're saying that it's only AI that's short-lived.
- ath3nd 4mo agoThis is pure financial engineering. Google's parent company owns shares in SpaceX SpaceX about to do an IPO making it the biggest grift/loss in history Google's parent company uses Google under the pretext google needs compute (hahha) to prop up their SpaceX investment It's not more complicated than circular investments on a planetary scale and the shamelessness and greed of everybody involved.
- qaq 4mo agoBasically xAI is pulling a Palantir. They try to reposition datacenter capacity lease revenue to have a multiplier of fast growing frontier lab.
- celdon25 4mo agoElon is brilliant when it comes to hardware. But unfortunately with xAI, he went on a firing spree, PayPal Mafia style, just like with Twitter when he bought it, shortly before doing another hiring drive, and failing to hire software engineers at scale. The datacenter deals came after. But now, the man who promised the world an AI system that defends free speech and is “pro-human”, is instead selling to his competitors and lowering the daily app usage limits of his own Grok by an order of magnitude (really). If you’re dealing with the world’s richest man, you can predict that money will come before other concerns despite other rhetoric. Interesting strategy though! Edit: To be fair, they did decide that hardware was "the bottleneck" according to an interview I saw last year. But I firmly believe they underestimated the software problem (and their app was/is riddled with them).
- top_sigrid 4mo ago> Elon is brilliant when it comes to hardware. What shall that even mean?
- cooper_ganglia 4mo agoTesla, Falcon 9, Starlink, Mechazilla, SolarCity, Colossus, Neuralink, Starship, Optimus...
- missedthecue 4mo ago
- bluegatty 4mo agoSpace X is a bet on AI, which is not 'data centre leasing' - it's a short term profitability bump and foregoing the entire AI dream. Not a good look. But the short term numbers may oddly provide the emotive juice necessary to fuel the gig "hey, look at their massive revenues!"
- karl_gluck 4mo agoIs this HN user runako’s comment[1] from 2 days ago turned into an article? I guess it’s very possible multiple people are coming up with the same idea at the same time but given this was submitted by the author it seems kinda rude not to mention it. [1] https://news.ycombinator.com/threads?id=runako#48426082 https://news.ycombinator.com/threads?id=runako#48426082
- fragmede 4mo agoThe SpaceX S1 writes this out, all it takes is a blogger to want to write it out further. Who knows if they even saw Runako's post?
- outside1234 4mo agoEDIT: A data center REIT where 1/5th of the datacenter falls apart each year and needs to be rebuilt. (aka "not a good REIT investment") Because the GPUs go out of date.
- joefourier 4mo agoAnd yet Anthropic is paying xAI over a billion dollars a month for those out of date GPUs in their first datacentre (H100s being nearly 4 years old at this point). Even A100s are still barely available on the major clouds despite being 6 years old.
- redox99 4mo agoAnd I expect blackwells to hold value even more (already very LLM optimized, and semiconductor processes will slow down).
- joefourier 4mo agoYeah most of the performance increases have mostly been from architectural improvements like reduced precision tensor cores. AFAIK FP4 is basically the limit for floating point matmuls, after which you need to switch to integer addition if you want to reduce bits, and I don’t think we’ve figured out 1-bit LLMs just yet.
- LearnYouALisp 4mo agoEye-watering. Who are Anthropic's main consumers?
- maxdo 4mo agoIt’s a vertical company they did compute very good , their top model bounce between top tier and -1 -2 gen. They were top tier only once though on paper briefly . If tomorrow thy will hit top tier , that do have know how to expand . They can even buy back from Google or anthropic if they agree.
- otterley 4mo agoIt's not a datacenter REIT. Datacenter REITs don't sell compute. They sell space, power, and cooling in which compute lives. I get the point the author is trying to make (in that SpaceX's most valuable asset is its compute capacity), but it's not quite the right analogy. SpaceX is basically Elon's holding company for everything-but-Tesla at this point. If you're betting on SpaceX, you're betting on a conglomerate.
- mNovak 4mo agoI think the right comparison would be a vertically integrated Neocloud like Oracle (insofar as they own some/most of their own datacenters, unlike a CoreWeave).
- georgeburdell 4mo agoNot that my feelings or opinion matter, but I'm going to be devastated if this xAI grift takes down SpaceX. I am reminded that the 90s Boy Band groups Backstreet Boys and N*SYNC were the side projects of a Ponzi Scheme.
- protocolture 4mo agoI hope that Backstreet Boys grift didnt take down the Ponzi scheme.
- blactuary 4mo agoWriting this: > In comparison, SpaceX/xAI are incredible at building datacentres on time. The original Colossus 1 datacentre was built in 122 days. Musk's empire does have a huge advantage in really understanding how to plan, build and execute enormous infrastructure projects quickly Without even mentioning that it was done illegally and the air pollution they are creating with gas turbines is wildly irresponsible
- notyourwork 4mo agoIt’s easy when you skirt regulations.
- bobsomers 4mo agoIt's easy to deliver things fast when you don't care at all for the local communities or residents whose lives you ruin in the process. https://www.youtube.com/watch?v=_bP80DEAbuo https://www.youtube.com/watch?v=_bP80DEAbuo (@ 4:08)
- s08148692 4mo agoNo it's not. That statement assumes other corps care. They don't. If it was easy, everybody would be doing it. The fact that not everyone doing it is not because everyone else is not out of the goodness of their hearts
- greensh 4mo agoDeeper pockets mean less regulations apply to you though. You have better lawyers and lobby.
- entropi 4mo agoI think the point is not difficulty but rather recklessness. I don't think other large players lack the ability or the deep pockets to do the same, but they might be lacking on the recklessness department for whatever reason. That reason, whatever it may be, might be the interesting part here.
- 4mo ago
- aiisascam 4mo ago[dead]
- mattas 4mo agoSo it's Coreweave?
- credit_guy 4mo agoSure, but it's very different from a regular datacenter REIT. It's supply and demand: a regular datacenter REIT competes with tons of other datacenter REITs. xAI has something to offer that basically nobody else can: datacenter capacity ready to use for LLM inference. When you are a monopoly you can charge exorbitant prices. There's no shame in being "just a datacenter REIT" when you can charge 10x what it costs you to run that datacenter.
- overgard 4mo agoAFAIK the Colossus data center was more or less "brute force" when it comes to building a datacenter fast -- ie it was very expensive and they cut some pretty ugly corners (their generators are "temporary" to get around regulations, but I don't see how they can possibly be "temporary" and they create a massive amount of pollution compared to other power sources). The reason I point that out is the article mentions that SpaceX is "better" at building huge datacenters. I think this might be an overstatement -- they're just more willing to throw massive amounts of money and bend as many rules as possible.
- frankacter 4mo agoCheap. Fast. Good. Pick two. Colossus is the world's largest single, unified GPU cluster, all GPUs acting as one coherent supercomputer rather than fragmented pools or multi-site setups. They spun it up in a fraction of the time by all estimates. It's not something you can just throw money at and reproduce the results. Per Jensen Huang: "As far as I know, there's only one person in the world who could do that; Elon is singular in his understanding of engineering and construction and large systems and marshaling resources; it's just unbelievable. A supercomputer that you would build would take normally three years to plan and then they deliver the equipment and it takes one year to get it all working." ..."it took 19 days to get Colossus from hardware installation to beginning training, the fastest by far anyone's been able to do that." https://www.businessinsider.com/jensen-huang-elon-musk-supercomputer-xai-grok-2024-10 https://www.businessinsider.com/jensen-huang-elon-musk-super... Regarding on site generators. Meta, OpenAI (Microsoft/Oracle) and others are also using on-site gas turbines, generators, and "behind-the-meter" power plants to keep up with the power demand. This has become an industry-wide strategy driven by grid constraints, with natural gas as a fast-deploy option. It would be great if the grids could keep up with demand, if other options would be considered capable of producing the ongoing demands (ie. more renewable, nuclear, etc) but they're not, and companies are not going to just wait because then they're as good as done.
- JumpCrisscross 4mo agoYeah, maybe the thing xAI gets is perfect is the enemy of good (enough).
- noobcoder 4mo agoMakes sense, instead of competing in the never ending race of frontier models they go for a different layer which these models can run on
- exabrial 4mo agoI’m so confused by conflicting headlines and studies. One set says gpus sit idle most of the time, then there are apparent capacity problems with Anthropic. So what’s the deal?
- fragmede 4mo agoWhat are those two groups selling? Blowhards like Ed Z. are selling their opinions so they need people to believe them. Anthropic et Al are selling inference for today dollars, and need compute to run that on. Your guess as to who's actually right, and who's selling smoke and mirrors though.
- deleted 4mo ago[deleted]
- throwawaypath 4mo agoSounds like a sound strategy to actually profit in during the AI craze, no?
- hsgwveeheu 4mo agoIf it is a craze then no. You want to sell shovels, not buy overpriced land during a gold rush. That said details matter. Can the DCs be reused for other in-demand things?
- albedoa 4mo agolmfao did you create a new account just to reply to yourself.
- throwawaypath 4mo agoVery cool and worthwhile way to spend your one fleeting existence dude: https://news.ycombinator.com/item?id=48471322 https://news.ycombinator.com/item?id=48471322 lmfao did you search my history to find my comments to reply to because youre butthurt.
- throwawaypath 4mo agoIsn't renting GPUs in this scenario renting shovels? GPUs do the "digging".
- chopete3 4mo agoxAI sells AI services. Not sure why the author chose to link xAI to the compute rental part. The compute rental is driven by SpaceX AI likely driven by SpaceX side of the business. It is not xAI.
- epsteingpt 4mo agoI don't think this is good news for the AI industry. If they can't build enough capacity where their best option (and they're signing multi-BILLION dollar contracts) is an unproven 'datacenter in space' technology, we are toast. - near term costs will go up (demand is greater than supply) - tokens shift from all you can eat (TOKENMAXXX) to ROI-driven - engineers with real orchestration skills rule and shift to lower cost optimization (deep seek) - Frontier AI unit economics collapse
- blindriver 4mo agoThere is a lawsuit against xAI about those datacenters. They have a strong case that Musk is clearly flouting environmental laws. If they are able to get a preliminary injunction against the datacenters, then they are dead in the water. That's the only reason why they build them so quickly.
- mrcwinn 4mo agoElon is controversial, and I know the popular mood is to dunk on this IPO, but in the end he gets a lot right. I think it's very likely the Tesla deal happens, and I further thing that regardless what Google and Anthropic do long-term — SpaceX/Tesla will likely have an awful lot of Optimus robots, and those robots will need an awful lot of compute. I'd be very surprised if Elon lets some frontier lab be the intelligence layer of his robotics stack when he has all the raw materials himself. And in fact, rather than introduce model COGS, he will have had the frontier labs paid for all the CapEx he'll need to run robotic inference using his own models. Pretty smart if that's what happens.
- egr 4mo agoHere is my take: - roughly 1B revenue per month is a good look for SpaceX - provides some credibility to otherwise non-existent xAi business. - pos. News for Google due to their share in SpaceX. - can be interpreted as leasing versus building for Google, a nice Hedge on compute capacity. - saves Capex for Google at time of horrendous GPU, memory costs. It is only a bridge until 2029. What will be the value of the SpaceX data centers by then? Fine print matters on deal with Google. MS made billions up front payments to Coreweave. SpaceX has no upfront payments, has to stem Capex alone. Very favourable for Anthropic and Google. Provider Compute Sold Valuation -------- ------------ --------- Nebius ~$46.4B ~$55.3B CoreWeave $99.4B ~$55.8B SpaceX ~$70+B ?
- chii 4mo ago> roughly 1B revenue per month is a good look for SpaceX this agreement between spacex and google can be cancelled with 90 days notice from either party without the other's agreement. It's purely there to make the IPO look good, on google's part.
- utopiah 4mo agoSelling shovels during the gold rush. Except there is no gold. Or arguably that "gold" is prohibitively expensive to use (not just store, it deprecates fast) so the entire rush is being subsidized. Let's go! /s
- pingou 4mo agoIs the SpaceX 1.7 trillion IPO on Friday some kind of psychological anchoring? Say it goes down 50%, then it suddenly appears cheap, when in reality that would still be way overpriced.
- softwaredoug 4mo agoI’m not anti data center, but Colossus 1 is the posterchild for the anti data center crowd. The grievances with Colossus 1 might be a major cause why other data centers have such high opposition. Polluting power generation, straining local power and broken promise after broken promise to fix the situation. And regulators caring more about helping xAI than mitigating the problems.
- avadodin 4mo agoSo DCA into the space–mining/military–contractor/REIT stock as soon as you can afford to and hold through the AI crash into the AI spring?
- fragmede 4mo ago[dead]
- bob1029 4mo agoI started doing some numbers around the scale of tokens per second we can generate with figures like 300 million watts and I really don't understand the destination anymore. I see that Anthropic is somehow constrained in the news, but that doesn't line up with headlines. Everything seems off by 3-4 orders of magnitude here. I realize there are some users of AI who can burn a million tokens like it's nothing, but these facilities can produce trillions (10^12) per day. I feel like there is some use case planned here that isn't to be known about until it's way too late to do something about it. Or this is a very serious bubble. One of the two or some really horrible blend.
- tylergetsay 4mo agoI'd be really interested in seeing your numbers, I've thought about this. I do feel like there are some use cases which are cost constrained right now, but that area is getting smaller as local models get better.
- LamaOfRuin 4mo agoI haven't done any math, but if you have individual users that can burn millions of tokens a day, then it does not take very many of them (at SaaS scale even limiting to power users) to hit trillions. And even fewer to run into problems specifically with time of use.
- nijave 4mo agoAlso consider it's a pyramid scheme of AI users using AI to generate AI apps filled with AI features powered by OpenAI and Anthropic APIs monitored and fixed by AI tools and automation. Meanwhile product managers and sales busy drumming up new features with AI
- nijave 4mo agoDid you factor in model training and peak vs avg throughput? Also yes, it is serious bubble.
- morpheos137 4mo agowhat if superintelligence is a myth? There is no mathematical reason why it should exist. The exploitablity of the environment is finite. Humans seek utility not intelligence as it own end. It is entirely possible we have overinvested in compute to the point of cargo cult.
- nova22033 4mo agoElon doesn't need the GPUs for macrohard? https://www.cnbc.com/2026/03/11/musk-unveils-joint-tesla-xai-project-macrohard.html https://www.cnbc.com/2026/03/11/musk-unveils-joint-tesla-xai...
- leopd 4mo agoAs far as business models go I think REIT for GPUs looks much more durable than Frontier Lab these days. The AI economy has a few big parts: - Raw materials: Silicon, electricity - Data centers: turn raw materials into compute - Model vendors: turn compute into tokens The frontier labs are competing in the idea that their tokens are worth more $/mtok than the others. If you look at the cost/quality Pareto curves, yes OpenAI and Anthropic are in the corner of expensive & good. But you need a log scale on price to look at these charts because the Chinese models are almost as good for a small fraction of the price. For this business model to be sustainable they need to keep innovating faster than everybody else AND for the quality difference to stay meaningful. Neither of those seem like sure things or frankly even likely to happen. In contrast, further down the supply chain, folks supplying compute and raw materials both seem to be providing solid services that will be useful in the long term.
- oofbey 4mo agoNice breakdown. But data centers are increasingly responsible for their own electricity. As in Colossus.
- lumost 4mo agoIs this the inevitable outcome of frontier labs who own their hardware? the GPUs and datacenters are the major cost. The inference and training a higher tier value proposition, if the company gets nervous that the investment in hardware won't pay off - renting it becomes a major topic of conversation. A frontier model team having to fight their board on whether to monetize the datacenters directly or continue to invest in AI work is going to have a hard time.
- burnerRhodov3 4mo agoAnthropic deal is 1.25B a month for half a gigawatt, with it rising up to 1g.(total deal size 2-2.5B a month) add on this google $900m a month and you get 3.4B a month. Starship cost is probably something like (y = (400m - 20m(0.85)^t + 20m, where t is times starship is launched. At 30 launches, they are close to their target of $20m. A single nvidia NVL72 rack's peak performance is around 135w so 1gw (1,000,000 kW /135 kW per rack‚ is 7,407. each rack weighs around 1.47 metric tons. so you have 7407/1.47t = 10,888.29t+ 15,243.606 (plus 15,243.606 is for an additional 140% for foldable radiator and solar panels... so 26,131.9t to orbit for 1gw of compute. each starship can do 100T, so 26,131.9t/100 gives us 261.32 starships. given the cost curve earlier: Total Cost = ∫₀²⁶¹ (380 0.85ᵗ + 20) dt Total Cost = F(261) - F(0) ≈ 5,220.00 - (-2,338.19) ≈ 7,558.19 So $7.5B for the required tonnage to space. 3 million to $3.5 for each rack is 7407 * 3.5m = 25,924.5b. + 7,558.19 is 33b. if we can rent 1gw for $2-3b a month we get buyback in 13ish months? Literally best business model ever. if they last 5 years, each gw is worth $160-180B for the cost of $33B. Holy F*ck.... SpaceX is going to be the most valuable company of all time by a long shot.
- rmeara 4mo agoThe math currently works given a lot of rosy assumptions about xAI's ability to develop Starship + orbital cooling but no way it works in 5 years. There's a huge GPU shortage right now, so prices are inflated. In the long term what matters is that cost of launch + space hardware < cost of electricity Electricity is only about 10-15% of the cost of running a terrestrial AI datacenter, so that doesn't give them a lot of room to undercut their terrestrial competitors
- burnerRhodov3 4mo agoWhat terrestial competitors? It is illegal to build datacenters in the states without getting sued to death. 10-15% opex over 5 years, gives you what?
- m3kw9 4mo agoFace it, nobody serious is using Grok for anything, they may as well sell the compute
- brightball 4mo agoYet
- grim_io 4mo agoWhat's first, a usable frontier grok model or actual FSD(unsupervised)? Might as well be the Mars colonization the way both are going.
- brightball 4mo agoI mean...I have a Tesla Model 3 with FSD enabled. I turn it on by default now when I'm in the car and I can't remember the last time I felt like I needed to takeover. It's been at least a month. FSD unsupervised seems pretty close to me.
- torginus 4mo agoExcept GPUs are not real estate but depreciating assets and are priced with extreme scarcity pricing currently.
- game_the0ry 4mo agoI worked in REITs. A REIT is a tax structure with 2 key features: 1. By law, they must pass through and distribute at least 90% of their taxable income to shareholders every year. 2. They pay 0% in corporate income taxes on the income they distribute, as long as they meet the 1st requirement. xai is not even close on either. Terrible take. What they should have said -- xai is looking more like a hyper scaler, the aws for ai infra.
- yrds96 4mo agoI think Elon Musk realized that only hardware vendors are profiting. Even if AI doesn't make it, datacenters can be used for something else
- sameersri2004 4mo agoThe data center or compute has now started acting more like a real estate or mutual fund, where people are treating it more like an investment than a commodity. I guess in the near future the only exchange for intelligence would be the amount of compute.
- jadecarter68 4mo agoIf xAI can recoup all their capex in 18 months just from renting out capacity, that's a way better business than trying to compete with OpenAI on models.
- oscarcooper257 4mo agoIf xAI can recoup all their capex in 18 months just from renting out capacity, that's a way better business than trying to compete with OpenAI on models.