5 ms·

Google, of all companies, much vaunted (as in your comment!) for its huge infrastructure footprint, is renting compute from SpaceX to the tune of almost a billi

by keeda 2mo ago

Google, of all companies, much vaunted (as in your comment!) for its huge infrastructure footprint, is renting compute from SpaceX to the tune of almost a billion a month: https://techcrunch.com/2026/06/05/google-will-pay-spacex-920m-per-month-for-compute/ https://techcrunch.com/2026/06/05/google-will-pay-spacex-920... This is in addition to bumping their CapEx spend to the extent their cash flow turned negative for the first time ever this quarter: https://arstechnica.com/google/2026/07/google-just-had-its-first-negative-cash-flow-quarter-ever-due-to-massive-ai-spending/ https://arstechnica.com/google/2026/07/google-just-had-its-f... The world doesn’t realize how desperately compute-crunched hyperscalers are to meet AI demand. This is a better problem to have than SpaceX, which is renting out capacity obviously because it’s own AI products aren’t selling.

haldujai 2mo ago
A deal with a company Google has a share of, announced a week before their IPO, with very non-committal terms and ramp period protections delivered in one large block on short term notice priced likely at the high end of what Google charges for A4X instances anyway. I don’t think this reflects desperation as much as strategy.
- keeda 2mo ago
  I dunno if it's a sound strategy that involves repeatedly telling investors [1] and employees [2] over multiple quarters that you are desperate for compute, including leaving a triple-digit billion backlog on the table [3], and then spending so much on CapEx that you have your first negative cash flow quarter ever and taking the inevitable hit to the stock [4], while turning away a large paying customer (who also happen to be a competitor) [5] ;-) [1] https://www.mindstudio.ai/blog/sundar-pichai-google-compute-constrained-enterprise-ai https://www.mindstudio.ai/blog/sundar-pichai-google-compute-... [2] https://www.cnbc.com/2025/11/21/google-must-double-ai-serving-capacity-every-6-months-to-meet-demand.html https://www.cnbc.com/2025/11/21/google-must-double-ai-servin... [3] https://www.bloomberg.com/news/articles/2026-07-22/google-says-cloud-services-backlog-expands-to-514-billion https://www.bloomberg.com/news/articles/2026-07-22/google-sa... [4] https://arstechnica.com/google/2026/07/google-just-had-its-first-negative-cash-flow-quarter-ever-due-to-massive-ai-spending/ https://arstechnica.com/google/2026/07/google-just-had-its-f... [5] https://thenextweb.com/news/google-caps-meta-gemini-compute-shortage https://thenextweb.com/news/google-caps-meta-gemini-compute-...
  - haldujai 2mo ago
    Backlog meaning RPO over 5 years. It’s not as if they would be able to collect 250B today from OpenAI and Anthropic if they were to have that compute. In any case, my point is that the SpaceX deal specifically likely has ulterior motives.
    - keeda 2mo ago
      The RPO can be anywhere from 3 - 6 years, sure, but even on an annual basis that’s like a hundred billion now. It was already in the double-digit billions since before AI took off and has only been spiking since then, which tells us 1) it’s been huge for 3+ years, and 2) it’s still growing faster than they can collect it. This matches what all the other hyperscalers are doing. My point is that an ulterior motive is not necessary to assume when all their actions and statements point to them being severely crunched for compute. I mean sure, if they had a choice between say, CoreWeave and SpaceX, they’d choose the latter for the nice bump to SpaceX’s financials and their stake… but not just for that, not when it contributes to their cash flow turning negative and their own stock taking a hit.
      - haldujai 2mo ago
        It is very suspicious when they’re paying for GB300 more than they turn around and charge those out as a4x instances, it was announced a week before IPO and they have a 90 day exit option. > The RPO can be anywhere from 3 - 6 years, sure, but even on an annual basis that’s like a hundred billion now. OpenAI and Anthropic deals are mostly 5 year and Anthropic’s starts in 2027, accordingly these RPOs are sized for projected compute needs and run rate in 2027 not today. The only way either lab could pay 1 year of RPOs today (~80B for anthropic and ~150B for OpenAI) is with a lot more debt or circular financing, the former of which is difficult in this market. Everyone spending crazy money on capex right now says they have a crushing backlog and need more compute to protect their share price. I highly doubt the demand exists today at current prices if the big 3 hyperscalers magically had an extra 2-3GW of compute. It’s not like Anthropic and OpenAI are turning away customers offering to pay API pricing..
LarsDu88 2mo ago
This move was purely to pump up SpaceX stock price at its current absurd valuation b/c Google owns something like 6% of SpaceX
- janalsncm 2mo ago
  By your own math, doing this would have required SpaceX stock to go up $200B just to break even, and then Google would have to liquidate it.
  - LarsDu88 2mo ago
    What do you mean? Google bought SpaceX shares when it was a tiny startup. They are probably more than 100X on their initial investment. Even with a 99% drop in SpaceX stock, Google would still be positive. Edit. Google invested 900 million in 2015 for roughly 5% of the company which comes out to 71.5 Billion dollars at 1.45 Trillion dollar current valuation. That's an 80x increase. I think Larry Page individually might also have a very large stake as well.
    - janalsncm 2mo ago
      It doesn’t matter what price they bought SpaceX stock for. They could have gotten it for free. Any gain prior to Google’s investment could be realized prior to Google giving SpaceX even more money. What matters is the return on investment for the $12B/year into SpaceX. In order get that back by “pumping” SpaceX stock, SpaceX market cap would have had to increase $200B based on that investment, and then Google would need to sell the stock.
      - LarsDu88 2mo ago
        It would be extremely foolish for an early investor like Alphabet to liquidate SpaceX holdings en masse all at once. Also, for better or worse, SpaceX did increase by about 200B today. For all it's faults, it is forming a massive military and telecom monopoly that is nearly unassailable. In the next few years, it can start directly competing with Verizon. The Ukrainian military and civilian population heavily relies on those satellites
janalsncm 2mo ago
$12B/year is nothing to a company that makes 11x as much in profit. The question is whether that $12B can be turned into more profit.

by keeda 2mo ago

haldujai 2mo ago

A deal with a company Google has a share of, announced a week before their IPO, with very non-committal terms and ramp period protections delivered in one large block on short term notice priced likely at the high end of what Google charges for A4X instances anyway. I don’t think this reflects desperation as much as strategy.

keeda 2mo ago
I dunno if it's a sound strategy that involves repeatedly telling investors [1] and employees [2] over multiple quarters that you are desperate for compute, including leaving a triple-digit billion backlog on the table [3], and then spending so much on CapEx that you have your first negative cash flow quarter ever and taking the inevitable hit to the stock [4], while turning away a large paying customer (who also happen to be a competitor) [5] ;-) [1] https://www.mindstudio.ai/blog/sundar-pichai-google-compute-constrained-enterprise-ai https://www.mindstudio.ai/blog/sundar-pichai-google-compute-... [2] https://www.cnbc.com/2025/11/21/google-must-double-ai-serving-capacity-every-6-months-to-meet-demand.html https://www.cnbc.com/2025/11/21/google-must-double-ai-servin... [3] https://www.bloomberg.com/news/articles/2026-07-22/google-says-cloud-services-backlog-expands-to-514-billion https://www.bloomberg.com/news/articles/2026-07-22/google-sa... [4] https://arstechnica.com/google/2026/07/google-just-had-its-first-negative-cash-flow-quarter-ever-due-to-massive-ai-spending/ https://arstechnica.com/google/2026/07/google-just-had-its-f... [5] https://thenextweb.com/news/google-caps-meta-gemini-compute-shortage https://thenextweb.com/news/google-caps-meta-gemini-compute-...
- haldujai 2mo ago
  Backlog meaning RPO over 5 years. It’s not as if they would be able to collect 250B today from OpenAI and Anthropic if they were to have that compute. In any case, my point is that the SpaceX deal specifically likely has ulterior motives.
  - keeda 2mo ago
    The RPO can be anywhere from 3 - 6 years, sure, but even on an annual basis that’s like a hundred billion now. It was already in the double-digit billions since before AI took off and has only been spiking since then, which tells us 1) it’s been huge for 3+ years, and 2) it’s still growing faster than they can collect it. This matches what all the other hyperscalers are doing. My point is that an ulterior motive is not necessary to assume when all their actions and statements point to them being severely crunched for compute. I mean sure, if they had a choice between say, CoreWeave and SpaceX, they’d choose the latter for the nice bump to SpaceX’s financials and their stake… but not just for that, not when it contributes to their cash flow turning negative and their own stock taking a hit.
    - haldujai 2mo ago
      It is very suspicious when they’re paying for GB300 more than they turn around and charge those out as a4x instances, it was announced a week before IPO and they have a 90 day exit option. > The RPO can be anywhere from 3 - 6 years, sure, but even on an annual basis that’s like a hundred billion now. OpenAI and Anthropic deals are mostly 5 year and Anthropic’s starts in 2027, accordingly these RPOs are sized for projected compute needs and run rate in 2027 not today. The only way either lab could pay 1 year of RPOs today (~80B for anthropic and ~150B for OpenAI) is with a lot more debt or circular financing, the former of which is difficult in this market. Everyone spending crazy money on capex right now says they have a crushing backlog and need more compute to protect their share price. I highly doubt the demand exists today at current prices if the big 3 hyperscalers magically had an extra 2-3GW of compute. It’s not like Anthropic and OpenAI are turning away customers offering to pay API pricing..

LarsDu88 2mo ago

This move was purely to pump up SpaceX stock price at its current absurd valuation b/c Google owns something like 6% of SpaceX

janalsncm 2mo ago
By your own math, doing this would have required SpaceX stock to go up $200B just to break even, and then Google would have to liquidate it.
- LarsDu88 2mo ago
  What do you mean? Google bought SpaceX shares when it was a tiny startup. They are probably more than 100X on their initial investment. Even with a 99% drop in SpaceX stock, Google would still be positive. Edit. Google invested 900 million in 2015 for roughly 5% of the company which comes out to 71.5 Billion dollars at 1.45 Trillion dollar current valuation. That's an 80x increase. I think Larry Page individually might also have a very large stake as well.
  - janalsncm 2mo ago
    It doesn’t matter what price they bought SpaceX stock for. They could have gotten it for free. Any gain prior to Google’s investment could be realized prior to Google giving SpaceX even more money. What matters is the return on investment for the $12B/year into SpaceX. In order get that back by “pumping” SpaceX stock, SpaceX market cap would have had to increase $200B based on that investment, and then Google would need to sell the stock.
    - LarsDu88 2mo ago
      It would be extremely foolish for an early investor like Alphabet to liquidate SpaceX holdings en masse all at once. Also, for better or worse, SpaceX did increase by about 200B today. For all it's faults, it is forming a massive military and telecom monopoly that is nearly unassailable. In the next few years, it can start directly competing with Verizon. The Ukrainian military and civilian population heavily relies on those satellites

janalsncm 2mo ago

$12B/year is nothing to a company that makes 11x as much in profit. The question is whether that $12B can be turned into more profit.