This 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.
Except for people who have pensions/investments in whole market class investments who become exposed to an over valued company with a propped up value.
If whole market means whole market, then such investments are exposed to companies who are fairly valued, companies who are massively overvalued, and companies who are massively undervalued, and the whole range in between.
If you want to start picking and choosing which companies are overvalued and which are undervalued, don’t invest in whole market funds. But most people are not good at that!
> 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.
I rreally dislike how big corp figured out that the can sell stuff to each other without actually moving some good. Looking at you, Nvidia... I have a feeling that the ordinary people will again pay for that.
Google 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.
> 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.
> 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.
Teslas spend a tiny percentage of their life at highway speeds, and a major selling point of the platform is that their compute would be used to pilot the vehicle.
If they could train using Teslas they wouldn't have needed Dojo.
You make it sound like they’ve given up on Grok, which I don’t think is accurate. I think it’s been mentioned the Grok 5 1.5T model is currently training on Colossus 2. And their recent deal with cursor is part of being able to eventually compete with Anthropic for agentic coding.
Strongly agree with all of this, except that charging rent for the use of an asset you own is not what economic "rent-seeking" means. I blame the dumbass economists who named it this, forever polluting the discussion to be had about regulatory capture and legalized political bribery.
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!
A 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…
But 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.
Musk sold Twitter into xAI which he then sold into SpaceX as a financial engineering effort to lessen the impact of massive debts and cash burn. The IPO and some clever structuring is the final step in the process.
Not 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.
Why 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?
You 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.
The stated goal is to "go to mars", the real goal is to make money.
He sold his failing but hype business to his soon-to-IPO successful but kinda boring business.
It's a way of laundering the debt and dumping into investors as he pitted different indexes against each other to force his way into one of them, and have people's 401k buy into them. Its a ton of money.
I wouldn't be surprised if Tesla is bought into spaceX in the future.
It has nothing to do with Grok, at least not the current iteration. SpaceX is the only company that can concievably launch large scale orbital compute.
So 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.
Is 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.
Well, Elon seems to take the fastest path possible to these DCs. One can envision a future where these get shut down for the severity of the pollution, not to mention being built and operated illegally [0].
> 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.
I’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.
I 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.
> 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.
Liquidity for investors. They raised everything they could from private markets, government contract, debt, the remaining source of financing is from the public
These 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.
“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.”
SpaceX has recently started pitching itself as an orbital datacenter company.
If you buy into that business model (or pretend to), it makes sense for SpaceX to start selling compute early. Their "earthside compute" clients of today are "skyside compute" clients of tomorrow.
A part of Musk's old pitch for Starlink was: space-based solar makes perfect sense for powering space assets, and no sense whatsoever for powering Earth assets. So you have to find a way to use that power in space to do something economically useful. Comms were the only scalable way to do that, so Starlink it was.
I can see how space-based datacenters would follow the same logic. If SpaceX can make them economical, that is. There's no guarantees of that - but if anyone at all can make space-based datacenters economical, it's SpaceX.
> if anyone at all can make space-based datacenters economical, it's SpaceX
Let's hope burning ten thousand tons of toxic e-waste annually in upper atmoshphere never becomes economical. Or mankind gets to senses and bans externalizing your e-waste problem by burning in atmosphere...
There are no NIMBYs in space. No government permitting on land use. And solar power is plentiful. It's like having a dollar store Dyson sphere.
Making use of that is predicated entirely on being able to put a lot of hardware into space cheaply. SpaceX is the undisputed best at that, no one comes close. The question is whether their "best" is good enough to make space datacenters economical.
There are many Not In My Orbit people on this very page. Many current national politicians would be happy to vote AI out of orbit today. Space is not an escape from earthly politics.
I am surprised how many people say that there is no reason to put data centers in orbit, when, at the same time, data centers are becoming the hated thing du jour all over the US and politicians left and right (but mostly left-of-center) are touting bans and restrictions to their electorates.
It is definitely to escape most political pressures on Earth. They will never be able to sidestep the US feds, but aside from an open war with China or Russia, all other authorities are out of the game when it comes to space.
My job is mostly worrying about cooling paths, maintenance, power, heat transfer, lifetime of GPUs, and high performance networks. NVIDIA partner. I can drive to the datacenter. This stuff BARELY works here on Earth. Especially thermal issues.
Looking forward to watching spacex defeat physics.
Evaporative cooling is the way it happens down on earth - and that shuttles h2o molecules from dense useful clumps like aquifers and rivers to a less useful form spread out in the air. But evaporating h2o isn’t an option in space afaik - since there’s a shortage of air to take up the h2o. In fact I think radiative cooling is the only actual option in space.
That's the neat thing: you don't, or at least not in the megawatt range. A kilowatt can be done with radiative cooling but doesn't get you far with a hypothetical datacenter satellite.
The data link between earth and space has so much bandwidth.
There are sensors in space that send data to earth it gets processed and then the data is sent back to space then to the end user back on earth. If you do the compute in space you save the space-earth transfer time twice. Latency and availability of bandwidth are both factors.
There may be limited utility for this outside of military.
Can anyone explain how the thermals will work? One of the biggest challenges on Earth is cooling the data center, and it's at least as challenging in space.
The earthbound equivalent would be strapping each chassis to the back of a dedicated solar panel and having the panel double as a giant heat sink. The problem is that doesn't work on the surface due to (at least) rain, the day/night cycle, and the cost of real estate.
But it doesn't matter since in this scenario each chassis is powered exclusively by the respective panel. How hot does a black panel sitting in the midday sun get? That's your equilibrium temperature. As long as it's within the operational limit of the device there's no problem.
The reason earthbound DCs are difficult to cool is because of density. When you match up panels to devices and shelter in their shadow you no longer have anywhere near the same power density.
It won’t. It’s not supposed to work, it’s a mirage to raise dumb money. It’s way, way more challenging to cool something a vacuum. The only option is radiative cooling, which is far from being performant. The idea is as realistic as Musk previous grifts such as his digging company and there hyperloop, both absurd and supposed to revolutionize transport, both created as grifting devices and ensure public transport doesn’t develop in the US
There are asteroids with concentrations of precious metals more valuable than earth's entire economy. Why don't we just send up spaceships to mine them and send the haul back to earth? What country would say no to free money?
After all, it's just an engineering challenge, not impossible.
The numbers on that are at least somewhat questionable. Even ignoring that you'd crash the market (thus it's not actually worth what it first appears to be) what is the total fuel cost to adjust the orbit of the target asteroid to land the entire thing back on the earth? Because that's what you're doing bit by bit as you shuttle loads of ore back.
Now if you have space based manufacturing or fuel production on the other hand ...
When I hear space I think "that's the perfect location for a data center", since data centers are lightweight, small, require little power, don't need human intervention, have lifetimes measured in decades and don't have to reject heat. Since space easily satisfies these requirements, space is an ideal deployment location for data centers.
Isn't the Vegas Loop just a car tunnel? As far as I know, there aren't any actual hyperloops[1] involved, just a narrow highway, even if they deceivingly brand it "Loop".
It seems off at first glance but actually appears to work out if you do the math. You can model a solar panel as a flat, opaque rectangle. You can calculate power generation and equilibrium temperature for it based on surface area. If you require additional radiative surface area to achieve the desired equilibrium temperature you can place a flat triangle orthogonal to and behind the solar panel in its shadow.
Compute is "free" at that point because waste heat is coming out of the total energy flux which was already accounted for (because we modeled it as opaque).
Of course swapping out the equipment poses a bit of a challenge. The "helping hands" rate is entirely unaffordable and wait until you see this new DC's physical access policies. 0/10 would not rack with them again.
This is all just the typical Elon hate. What's desperate about getting paid $920,000,000 per month? If that's desperation, I'd love to start groveling more!
Given extreme supply constraints, it's very unlikely that Google or Anthropic will just suddenly cancel right after the IPO unless their own demand collapses. And even if this were true, what value would that provide Musk? Could you imagine if your newly public company suddenly received termination notices from your two largest compute customers? Disaster.
I have no love or hate for Elon Musk. I wish him luck with his space endeavours.
What's desperate is announcing a temporary (allegedly) doubling of revenues days before an IPO that has been criticised for being overpriced at 93 times sales.
These data centers were supposed to serve xAI. Now suddenly they get rented out to others. Why the sudden change of plans?
It's either an emergency accounting gimmick or the effective shutdown or repurposing of xAI.
It’s a repurposing of xAI to be a commodity service provider during a crunch for that commodity. It would be dumb if xAI had any quality or market traction, but they have neither, so it’s actually a rational fallback. But it writes off any high margin future in favor of low margin scale.
And once the compute crunch is over, they’ll have a lot of overprovisioned data centers with no business to soak up the capacity.
Didn'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.
If you look at the IPO filings you’ll see that Spacex as we know it is just a small part of the expected revenue generator. It is supposedly Grok and AI, hence Google competitor.
All companies are now AI companies.
Just like a while ago all companies were suddenly Ads companies.
The entire tech sector is one big FOMO - once you reach certain scale you do exactly the same thing as everyone else.
Their satellite internet business is the only thing which makes them money, which is enabled by their orbital launch business which is as of right now not profitable and I have no idea of if it ever will be but without it they would not be able to launch enough satellites.
Their stupidity with AI and buying X mostly seems to be about scamming investors to make Musk even richer. Like this particular deal is just them doing what CoreWeave does at a SpaceX valuation.
Launch isn't profitable simply because ongoing Starship R&D is eating into it. A lot of opex, capex, and pre-revenue.
If they start running Starship anywhere near the way they do Falcon 9, it'll flip into profits. A lot of big bets SpaceX made ride on Starship coming online. I'm honestly surprised Starlink is already so profitable without it.
One of their big named bets includes: orbital datacenters. Which puts this specific deal into perspective.
80% of the space launch business is putting starlink satellites into orbit, so it's all internal funny money. They could very well be letting the space launch business take losses to make the satellite internet business look better (only profitable part of the whole thing).
Wasn't starship supposed to be funded by the NASA contract?
Sorry, I was unclear. With that I did not talk about this particular deal. This particular deal seems sane. XAI built more compute that they can use themselves since Grok is not very successful so to not just have the hardware standing there they rent it out to competitors. Makes total sense.
It is other things Musk has gone with Twitter and SpaceX which are shady.
That's only about 35% more than the main telecom operator here in Belgium (Proximus: $7.2B revenue in 2025, $2.5B market cap, positive earnings for 15+ years).
Obviously Starlink can and will growth. I'm just pointing out how insane the market cap is, when compared to similar scale "connectivity" businesses.
Profitability 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.
Starlink terminals are popular, they put them on drones to avoid jamming (Starling jamming exists but not that easy for now). It might be their sales are inflated due to its use at war.
Is 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?)
How 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.
3 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.
Kinda; 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.
Supply and demand? Bubblists seem to think there's an infinite supply of chips, power, and water to make as many chat bots as possible; physics, as usual, dictates limits.
Its because none of the promised Data Center and NVIDIA hardware deployments described in NVDA earnings calls have actually happened. Once more Ed Zitron has the goods: https://youtu.be/zbKDmkJPVvI?t=482
Or alternatively there is simply a huge demand for compute and this is helping them fill a short-term need. Keep in mind if you saw in the article there is a 90-day cancellation clause. This is a nothing burger.
This 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…
Cloud 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.
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?
Other companies built data centers but also built products that soak up their data center capacity.
xAI built data centers, and products that are mostly good for nonconsensual porn and confirming a small group’s biases. So they have a lot of excess capacity, and might as well rent it to the adults.
No, CoreWeave for example also rent compute to the big AI companies. This likely just means Grok has few users so they need to rent their extra capacity to their competitors.
Yes 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).
If 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?
This 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.
> Truly a brilliant deal for everyone involved.
Except for people who have pensions/investments in whole market class investments who become exposed to an over valued company with a propped up value.
If whole market means whole market, then such investments are exposed to companies who are fairly valued, companies who are massively overvalued, and companies who are massively undervalued, and the whole range in between.
If you want to start picking and choosing which companies are overvalued and which are undervalued, don’t invest in whole market funds. But most people are not good at that!
> 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.
Sure it might not stay at 94x. But as long as SpaceX trades above 20x revenue, Google makes money from this deal.
And the bigger play is this deal pushes SpaceX over the finish line for S&P 500 inclusion. That's worth tens of billions for everyone involved.
I rreally dislike how big corp figured out that the can sell stuff to each other without actually moving some good. Looking at you, Nvidia... I have a feeling that the ordinary people will again pay for that.
This sounds exactly like the kind of thing that will be outlawed in thirty years after tracing back the root cause of the second great depression.
That would require regulators to actually pay attention, something they haven’t done actively since a long, long time
Outlaw what? Prevent companies from selling goods and services to each other?
You're right. Share price isn't based purely on a multiplier of current revenue.
But they did need to shore up that p/e ratio. Got to assuage our inner Ben Graham.
SpaceX is valued at that revenue multiple because of its expected revenue growth rate.
This deal is part of that revenue growth. So the new revenue would be already partially or even fully priced-in.
Perhaps it reduces uncertainty around the growth rate, but expectations were already sky-high, as shown by the multiple!
> Truly a brilliant deal for everyone involved.
Same thing they used to say about Lehman.
Do you really think its honest to call this Financial Engineering over Fraud?
Google 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.
> 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.
> 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.
Grok is just DOA. No need to beat a dead horse. Even Musk got that thus the reason why he is renting the stuff it planned for Grok.
Grok has plenty of "non-woke AI" cred which will make it a preferred choice for lots of government-side and politically sensitive workloads.
What do you think the term woke actually means?
I think their point is less that it really means something and more that enough customers think it means something to provide economic opportunity
Teslas spend a tiny percentage of their life at highway speeds, and a major selling point of the platform is that their compute would be used to pilot the vehicle.
If they could train using Teslas they wouldn't have needed Dojo.
You make it sound like they’ve given up on Grok, which I don’t think is accurate. I think it’s been mentioned the Grok 5 1.5T model is currently training on Colossus 2. And their recent deal with cursor is part of being able to eventually compete with Anthropic for agentic coding.
Strongly agree with all of this, except that charging rent for the use of an asset you own is not what economic "rent-seeking" means. I blame the dumbass economists who named it this, forever polluting the discussion to be had about regulatory capture and legalized political bribery.
They'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!
A 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…
But 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.
I think some justify it as SpaceX plans to offer hosting in space, and then use Starlink to distribute it.
Musk sold Twitter into xAI which he then sold into SpaceX as a financial engineering effort to lessen the impact of massive debts and cash burn. The IPO and some clever structuring is the final step in the process.
Not 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.
Wow…sounds like some kindergarten stuff
Why 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?
You 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.
The stated goal is to "go to mars", the real goal is to make money.
He sold his failing but hype business to his soon-to-IPO successful but kinda boring business.
It's a way of laundering the debt and dumping into investors as he pitted different indexes against each other to force his way into one of them, and have people's 401k buy into them. Its a ton of money.
I wouldn't be surprised if Tesla is bought into spaceX in the future.
He’s a drug addict and sociopath. Also has very thin skin (and hair) so he does stupid shit. Somehow we are all left holding the bag on his BS.
Next up Tesla and SpaceX are going to merge and that will another round of synergies where Tesla and Vision AI (in FSD) and xAI.
It has nothing to do with Grok, at least not the current iteration. SpaceX is the only company that can concievably launch large scale orbital compute.
So 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.
Is 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.
Well, Elon seems to take the fastest path possible to these DCs. One can envision a future where these get shut down for the severity of the pollution, not to mention being built and operated illegally [0].
[0] https://www.selc.org/news/xai-built-an-illegal-power-plant-t...
Which is precisely why there has been a push to weaken the EPA and other regulating agencies
> 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.
I’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.
I 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.
that's asking the cart before the horse; is there any data on what compute actually results in real GDP improvements?
Nothing other than vendor promises and white papers.
380 dollars per second... Good to know I could afford my own data center for an appreciable fraction of a minute.
For context, Alphabet earns ~$12k/sec.
plus $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.
> 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
These 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.
“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/1181412/000162828026...
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.
Either that or SpaceX is permanently turning xAI's assets into a neocloud because xAI itself has no traction.
The whole thing looks rather desperate. I wonder what SpaceX's margins are on these contracts.
SpaceX has recently started pitching itself as an orbital datacenter company.
If you buy into that business model (or pretend to), it makes sense for SpaceX to start selling compute early. Their "earthside compute" clients of today are "skyside compute" clients of tomorrow.
A part of Musk's old pitch for Starlink was: space-based solar makes perfect sense for powering space assets, and no sense whatsoever for powering Earth assets. So you have to find a way to use that power in space to do something economically useful. Comms were the only scalable way to do that, so Starlink it was.
I can see how space-based datacenters would follow the same logic. If SpaceX can make them economical, that is. There's no guarantees of that - but if anyone at all can make space-based datacenters economical, it's SpaceX.
> if anyone at all can make space-based datacenters economical, it's SpaceX
Let's hope burning ten thousand tons of toxic e-waste annually in upper atmoshphere never becomes economical. Or mankind gets to senses and bans externalizing your e-waste problem by burning in atmosphere...
Why would it ever be more economical to put datacenters in orbit, rather than on some dirt cheap land?
There are no NIMBYs in space. No government permitting on land use. And solar power is plentiful. It's like having a dollar store Dyson sphere.
Making use of that is predicated entirely on being able to put a lot of hardware into space cheaply. SpaceX is the undisputed best at that, no one comes close. The question is whether their "best" is good enough to make space datacenters economical.
There are many Not In My Orbit people on this very page. Many current national politicians would be happy to vote AI out of orbit today. Space is not an escape from earthly politics.
But you don't have to build it in someone's _backyard_, just build it in a middle of nowhere.
I am surprised how many people say that there is no reason to put data centers in orbit, when, at the same time, data centers are becoming the hated thing du jour all over the US and politicians left and right (but mostly left-of-center) are touting bans and restrictions to their electorates.
It is definitely to escape most political pressures on Earth. They will never be able to sidestep the US feds, but aside from an open war with China or Russia, all other authorities are out of the game when it comes to space.
That won’t ever be the case. It’s pure grift. There is literally no other actual reason
Because dirt cheap land usually does not have dirt, cheap water or dirt cheap electricity.
Water in orbit: famously cheap.
Ah yes: computation. Famous for annihilating water. Every bit you flip consumes an H2O molecule.
My job is mostly worrying about cooling paths, maintenance, power, heat transfer, lifetime of GPUs, and high performance networks. NVIDIA partner. I can drive to the datacenter. This stuff BARELY works here on Earth. Especially thermal issues.
Looking forward to watching spacex defeat physics.
Well, how do you cool servers in space then?
Evaporative cooling is the way it happens down on earth - and that shuttles h2o molecules from dense useful clumps like aquifers and rivers to a less useful form spread out in the air. But evaporating h2o isn’t an option in space afaik - since there’s a shortage of air to take up the h2o. In fact I think radiative cooling is the only actual option in space.
That's the neat thing: you don't, or at least not in the megawatt range. A kilowatt can be done with radiative cooling but doesn't get you far with a hypothetical datacenter satellite.
The data link between earth and space has so much bandwidth.
There are sensors in space that send data to earth it gets processed and then the data is sent back to space then to the end user back on earth. If you do the compute in space you save the space-earth transfer time twice. Latency and availability of bandwidth are both factors.
There may be limited utility for this outside of military.
Space-based datacenters simply won't work. That people are talking about them shows Musk is the greatest snake oil salesman the world has ever seen.
Can anyone explain how the thermals will work? One of the biggest challenges on Earth is cooling the data center, and it's at least as challenging in space.
The earthbound equivalent would be strapping each chassis to the back of a dedicated solar panel and having the panel double as a giant heat sink. The problem is that doesn't work on the surface due to (at least) rain, the day/night cycle, and the cost of real estate.
Isn't a solar panel going to be a poor heatsink, though? It's flat, and thus has relatively small surface area compared to its size.
In atmosphere, yeah, relatively speaking.
But it doesn't matter since in this scenario each chassis is powered exclusively by the respective panel. How hot does a black panel sitting in the midday sun get? That's your equilibrium temperature. As long as it's within the operational limit of the device there's no problem.
The reason earthbound DCs are difficult to cool is because of density. When you match up panels to devices and shelter in their shadow you no longer have anywhere near the same power density.
Thermals are one among many really big challenges that require costly solutions.
It won’t. It’s not supposed to work, it’s a mirage to raise dumb money. It’s way, way more challenging to cool something a vacuum. The only option is radiative cooling, which is far from being performant. The idea is as realistic as Musk previous grifts such as his digging company and there hyperloop, both absurd and supposed to revolutionize transport, both created as grifting devices and ensure public transport doesn’t develop in the US
> won’t work
A datacenter (earthbound or space) itself is a fantastical idea until a mix of events and inventions made it feasible to build them to sell compute.
You think the military can’t or won’t dump billions into this to make killing people with drones more effective?
It’s a engineering challenge not impossible.
There are asteroids with concentrations of precious metals more valuable than earth's entire economy. Why don't we just send up spaceships to mine them and send the haul back to earth? What country would say no to free money?
After all, it's just an engineering challenge, not impossible.
The numbers on that are at least somewhat questionable. Even ignoring that you'd crash the market (thus it's not actually worth what it first appears to be) what is the total fuel cost to adjust the orbit of the target asteroid to land the entire thing back on the earth? Because that's what you're doing bit by bit as you shuttle loads of ore back.
Now if you have space based manufacturing or fuel production on the other hand ...
When I hear space I think "that's the perfect location for a data center", since data centers are lightweight, small, require little power, don't need human intervention, have lifetimes measured in decades and don't have to reject heat. Since space easily satisfies these requirements, space is an ideal deployment location for data centers.
Yeah... What am I missing? Like why isn't this just laughed at when it's proposed?
I felt the same way about the "tube with an air hockey table in it." But here I am fifteen years later eating crow as I take the hyperloop to Vegas.
Isn't the Vegas Loop just a car tunnel? As far as I know, there aren't any actual hyperloops[1] involved, just a narrow highway, even if they deceivingly brand it "Loop".
https://en.wikipedia.org/wiki/Hyperloop
That’s the joke
It seems off at first glance but actually appears to work out if you do the math. You can model a solar panel as a flat, opaque rectangle. You can calculate power generation and equilibrium temperature for it based on surface area. If you require additional radiative surface area to achieve the desired equilibrium temperature you can place a flat triangle orthogonal to and behind the solar panel in its shadow.
Compute is "free" at that point because waste heat is coming out of the total energy flux which was already accounted for (because we modeled it as opaque).
Of course swapping out the equipment poses a bit of a challenge. The "helping hands" rate is entirely unaffordable and wait until you see this new DC's physical access policies. 0/10 would not rack with them again.
This may be one of the rare instances where the sarcasm is obvious without using the sarcasm font
> I wonder what SpaceX's margins are on these contracts.
In the Anthropic deal they have to be negative; Anthropic's announced higher margins during the deal.
This is all just the typical Elon hate. What's desperate about getting paid $920,000,000 per month? If that's desperation, I'd love to start groveling more!
Given extreme supply constraints, it's very unlikely that Google or Anthropic will just suddenly cancel right after the IPO unless their own demand collapses. And even if this were true, what value would that provide Musk? Could you imagine if your newly public company suddenly received termination notices from your two largest compute customers? Disaster.
Try logic.
I have no love or hate for Elon Musk. I wish him luck with his space endeavours.
What's desperate is announcing a temporary (allegedly) doubling of revenues days before an IPO that has been criticised for being overpriced at 93 times sales.
These data centers were supposed to serve xAI. Now suddenly they get rented out to others. Why the sudden change of plans?
It's either an emergency accounting gimmick or the effective shutdown or repurposing of xAI.
It’s a repurposing of xAI to be a commodity service provider during a crunch for that commodity. It would be dumb if xAI had any quality or market traction, but they have neither, so it’s actually a rational fallback. But it writes off any high margin future in favor of low margin scale.
And once the compute crunch is over, they’ll have a lot of overprovisioned data centers with no business to soak up the capacity.
Why don’t you have hate for Elon? You can love his companies but hate the man. It’s what I’m doing anyway.
Didn'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.
why would Google help a competitor like that, though?
Google (Alphabet) owns 6% of SpaceX which they bought for $12B in 2015. They want to maximize the value of their investment.
The article mentions Google is heavily invested in it.
How is Google competing with SpaceX?
If you look at the IPO filings you’ll see that Spacex as we know it is just a small part of the expected revenue generator. It is supposedly Grok and AI, hence Google competitor.
I can’t believe serious people use Grok. It has to be propped up by Twitter usage/Musk fans right? It really strikes me as the worst one.
They’re both AI companies
All companies are now AI companies. Just like a while ago all companies were suddenly Ads companies. The entire tech sector is one big FOMO - once you reach certain scale you do exactly the same thing as everyone else.
In the way that Michael Jordan and myself are both basketball players
I'd push back slightly — not on the conclusion, but on the reasoning. There's a simpler explanation that accounts for the same observations.
is there a reason you didn’t give the explanation…?
One of which has more capacity and wants even more, one of which has less capacity and is renting it out.
One is an ad company the other a lifestyle venture?
In the sense that if you want to sell anything whatsoever today it must an AI story.
Maybe common investors want to sell stocks to retail
They are not. The amount of conspiracy in high ranked HN comments for AI companies is insane.
Feels like these IPOs are thankfully the top coming before the AI crash and we get back to the real world.
One can hope, but that sentiment is quite unpopular on HN.
Everything is a conspiracy now.
Of course this is a real deal. Compute is the most valuable resource in the world for these companies at the moment.
What exactly is SpaceX's core business?
Their satellite internet business is the only thing which makes them money, which is enabled by their orbital launch business which is as of right now not profitable and I have no idea of if it ever will be but without it they would not be able to launch enough satellites.
Their stupidity with AI and buying X mostly seems to be about scamming investors to make Musk even richer. Like this particular deal is just them doing what CoreWeave does at a SpaceX valuation.
Launch isn't profitable simply because ongoing Starship R&D is eating into it. A lot of opex, capex, and pre-revenue.
If they start running Starship anywhere near the way they do Falcon 9, it'll flip into profits. A lot of big bets SpaceX made ride on Starship coming online. I'm honestly surprised Starlink is already so profitable without it.
One of their big named bets includes: orbital datacenters. Which puts this specific deal into perspective.
80% of the space launch business is putting starlink satellites into orbit, so it's all internal funny money. They could very well be letting the space launch business take losses to make the satellite internet business look better (only profitable part of the whole thing).
Wasn't starship supposed to be funded by the NASA contract?
Orbital datacenters sound like a dangerous bet. I couldn't think of a worse place for a lot of delecate electronics.
Boomers and luddites won't let them be built on earth so no other option really
It's more unpopular than that. Not surprising since they're competing underhandedly for electricity generation with everyone else.
I can understand this being a move to increase valuation, but I can't connect with the stupidity and scamming investors argument.
Sorry, I was unclear. With that I did not talk about this particular deal. This particular deal seems sane. XAI built more compute that they can use themselves since Grok is not very successful so to not just have the hardware standing there they rent it out to competitors. Makes total sense.
It is other things Musk has gone with Twitter and SpaceX which are shady.
I'm pretty sure xAI is just Musk throwing a tantrum after being played for a fool by Lying Sam.
Smoking crack and investment fraud.
With a light sprinkling of space.
Harvesting energy from the convulsions of people who got tds / tiktok psychosis during covid
Government contracts. Dumping its shares on retail investors. Selling compute to AI vendors
Its main business is connectivity. Starlink generated over 10B last year.
Becoming a broader infrastructure company with xAI.
That's only about 35% more than the main telecom operator here in Belgium (Proximus: $7.2B revenue in 2025, $2.5B market cap, positive earnings for 15+ years).
Obviously Starlink can and will growth. I'm just pointing out how insane the market cap is, when compared to similar scale "connectivity" businesses.
> Starlink generated over 10B last year
An entire one-hundredth of their proposed valuation!
Yeah, crazy for a company with nothing but the largest civilian satellite network and what amounts to a monopoly on space flight.
Profitability 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.
Starlink terminals are popular, they put them on drones to avoid jamming (Starling jamming exists but not that easy for now). It might be their sales are inflated due to its use at war.
A datacenter that also provides connectivity/Internet
Is 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?)
How 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.
It's a very long contract (till 2029) for just covering themselves for supply.
3 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.
No its not.
"Both SpaceX and Google have the option to terminate the agreement with 90 days’ notice after December 31, 2026"
Kinda; 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.
Not necessarily, just that they don't have as many as they can make use of, and that xAI can't make more valuable use of them than renting them out.
Supply and demand? Bubblists seem to think there's an infinite supply of chips, power, and water to make as many chat bots as possible; physics, as usual, dictates limits.
At this point you are not buying a particular chip. You are buying whatever compute you can get.
Or it’s paying to make sure competition can’t buy said compute. Also isn’t Google an investor in SpaceX anyways?
Yes, it is issue of scale, google had to restrict usage because hardware are not available, regardless of what kind of hardware that is
Its because none of the promised Data Center and NVIDIA hardware deployments described in NVDA earnings calls have actually happened. Once more Ed Zitron has the goods: https://youtu.be/zbKDmkJPVvI?t=482
It could be, or simply we are so far away into chip shortage that even google needs to buy from other people’s pot.
Or alternatively there is simply a huge demand for compute and this is helping them fill a short-term need. Keep in mind if you saw in the article there is a 90-day cancellation clause. This is a nothing burger.
This 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…
When as appears inevitable Google decides to stop using this capability what will it do to the SpaceX stock value?
Because SpaceX has excess capacity.
I knew GCP was third banana but what is even happening?
It's all about the money.
If you can't buy DRAM, you gotta rent your compute infrastructure.
Cloud 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.
Sorry, 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?
They overbuilt capacity for grok but no one wants to use grok for several reasons
Other companies built data centers but also built products that soak up their data center capacity.
xAI built data centers, and products that are mostly good for nonconsensual porn and confirming a small group’s biases. So they have a lot of excess capacity, and might as well rent it to the adults.
Scarcity. It's becoming difficult to plan for new data centers. They will rent where capacity is available. Grok hasn't gain the expected popularity.
No, CoreWeave for example also rent compute to the big AI companies. This likely just means Grok has few users so they need to rent their extra capacity to their competitors.
Plus it’s not like some absolutely enormous data centers, only 300MW.
Yes 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).
People with access to enormous wealth tend to get a lot of chances at the betting table.
If he’s so smart why isn’t grok using all that capacity?
Building excess capacity from the start and selling it for a billion a month to constrained competitors. I only wish I could be so dumb.
If 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?
[dupe] Discussion: https://news.ycombinator.com/item?id=48417490