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Google to pay SpaceX $920M a month for compute capacity at xAI data centers

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Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers

#281

Post by runako »

Since the S-1 filing, xAI has taken over and is likely the largest share of revenue. I would estimate that ~95%+ of xAI revenue, and 100% of its profit, is from renting their datacenters.

This is a datacenter REIT bolted onto a social media company bolted onto launch business bolted onto a niche ISP. The expected price to sales is ~100x. The best datacenter REITs trade at ~10x and pay a dividend, which SpaceX does not. Meta trades at ~7x sales. Comcast is one of the best-run ISPs, and it pays a 5.5% dividend on a stock trading at To say SpaceX is overvalued is to even beginning to convey the magnitude of the situation. It's going to be very painful when the valuation normalizes.

Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers

#282

Post by lanstin »

guax wrote: post #55
stri8ted wrote: post #31

Earlier quoted context omitted.

What metrics are you using to classify it as a downfall?

I don't care either way but I got curious. Not an easy thing to gauge. X/Twitter stopped publishing MAUs after the acquisition. External estimates vary, some point to growth, some to stagnation. We know that revenue suffered. LOTS of partisan and emotional opinions for either. Google trends does paint a bleak picture for X but I am also questioning how much google itself can gauge that after LLMs exploded in populari…

Anecdata: Mastodon now has witty, un-earnest comments semi-regularly. And I have learned of maybe ten percent of breaking news things in the last three months on Mastodon via links that weren’t just to twitter.

Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers

#283

Post by otterley »

tristanj wrote: post #205

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…

I don’t think your math is correct. Profit is revenues minus expenses. Unless Google’s purchase of compute brings SpaceX’s revenues into profit territory (such that their total revenues exceed their expenses), SpaceX still won’t be profitable. This is accounting 101.

Google’s investment in SpaceX is completely orthogonal to the analysis. Equity investments aren’t revenue for the issuer. (Gains on sale would be revenue to the investor, in which case, this would be Google, not SpaceX.)

Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers

#284

Post by trollbridge »

snypher wrote: post #276
dyauspitr wrote: post #239

Earlier quoted context omitted.

Outlaw what? Prevent companies from selling goods and services to each other?

I think SpaceX should be valued on rockets n space n stuff, not how many magical calculator dollars they bring in. Surely Google can "make compute go" for $1b/month. Nice way to avoid holding the bag, maybe?

The market seems to value both rockets and magical calculators.

Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers

#285

Post by martinald »

ajross wrote: post #199
comboy wrote: post #162

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 Mu…

Keep in mind Google also rents GPUs via GCP, so they could be just reselling these to GCP customers?

Thing is though, Anthropic was really against the wall with lack of compute pre xAI deal. And tbh, Gemini reliability has been abysmal which probably points to real compute shortages.

And nearly _every_ major DC project is really up against it with massive delays, etc. Stargate UAE has been badly affected by the Iran conflict.

So maybe long term this isn't a great business, but _right now_ I'm not convinced it's all financial engineering. There is a enormous shortage of compute and xAI has a load of it _available now_.

Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers

#286

Post by thefounder »

zozbot234 wrote: post #233
thefounder wrote: post #223

Earlier quoted context omitted.

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.

I am pretty sure the gov gets an uncensored /heretic version of the AI models instead of the nanny stuff we get so Grok really doesn’t have a “killer” feature. Even for multi model passes(I.e used purely as a contrarian gate) it’s not really that great due the high rate of hallucinations.

Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers

#287

Post by theturtletalks »

runako wrote: post #281

Since the S-1 filing, xAI has taken over and is likely the largest share of revenue. I would estimate that ~95%+ of xAI revenue, and 100% of its profit, is from renting their datacenters. This is a datacenter REIT bolted onto a social media company bolted onto launch business bolted onto a niche ISP. The expected price to sales is ~100x. The best datacenter REITs trade at ~10x and pay a dividend, which SpaceX does no…

Do companies like Uber, Tesla, etc ever intend to pay dividends? If a stock never intends to pay dividends, the value of the stock is simply the price the next shumck is willing to pay.

Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers

#288

Post by venkyvb »

merlindru wrote: post #110
devops000 wrote: post #104

“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/1181412/000…

why would Google help a competitor like that, though?

Google is safeguarding it's investment in SpaceX.

Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers

#289

Post by mihaic »

dyauspitr wrote: post #239
fooqux wrote: post #235

Earlier quoted context omitted.

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.

Outlaw what? Prevent companies from selling goods and services to each other?

Yes, if it's done with an intent to defraud the general population, which could be the case here. Effects and intent really matter when deciding actions.

Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers

#290

Post by trollbridge »

ajross wrote: post #199
comboy wrote: post #162

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 Mu…

Could you please describe the other satellite launch services whose prices are competitive with SpaceX?
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