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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

#291

Post by npn »

mgraczyk wrote: post #278
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…

For your math to make sense, Google would have to sell its stake this year There may be more to it than buying compute but what you're saying does not make sense for Google. More likely Google wants a good relationship with SpaceX and possibly to buoy the stock, but it's a bad NPV trade

On the other hand, google does not lose all the money in that deal. Computation is still expensive.

So at most they lose like 200M each month. Peanut compares to the potentially gain of the IPO.

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

#292

Post by trollbridge »

stuxnet79 wrote: post #225
embedding-shape wrote: post #219

Earlier quoted context omitted.

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.

I sure wish my company were failing the same way Musk’s allegedly are.

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

#293

Post by [deleted] »

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…

[deleted]

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

#294

Post by tristanj »

mannanj wrote: post #251
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…

Do you really think its honest to call this Financial Engineering over Fraud?

No. The definition of fraud is "lying for financial gain". This doesn't qualify.

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

#295

Post by ericd »

benl wrote: post #273
noir_lord wrote: post #272

Earlier quoted context omitted.

> 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!

Also, there’s a long history of companies that people yell about being overvalued being the drivers of index returns, because one of the major drivers is growth rate, whereas retail investors tend to look mostly at current state.

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

#296

Post by tristanj »

IAmGraydon wrote: post #280
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…

So masterful that a random guy on HN can see right through it. Let’s just call it what it is. It’s just basic fraud. They created a very temporary revenue injection right around the time of the IPO to defraud investors as much as they possibly can. Some businesses do this kind of thing just before they die because…why not?

No it is not. You are conflating the colloquial definition of fraud, with the legal definition of fraud. Fraud has a defined meaning.

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

#297

Post by whateveracct »

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…

prompt engineering, harness engineering, agentic engineering, financial engineering

AI is really a pioneering engineering field

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

#298

Post by whateveracct »

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?

it's not about that. it's about how it gets reported in their financials.

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

#299

Post by espadrine »

amazingamazing wrote: post #174
dwroberts wrote: post #151

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.

I see it mean two things:

1. Indeed, Google is compute-constrained, and is ready to buy any it can.

2. xAI (now SpaceXAI) has a lot of idle compute, which it resells to Cursor, Anthropic, Google, probably others as we speak.

In other words: Google is training models, xAI is not.

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

#300

Post by amluto »

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 sincerely hope the market is not willing to value this sort of deal at a P/E ratio anywhere near 94.

Off the top of my head, there is a very well established business involving buying expensive things and leasing them to the companies that intend to operate them so they can sell services: aircraft leasing.

AER is the biggest player and they have a P/E ratio of, drumroll please, 6. And I expect that GPUs, despite currently looking like an appreciating asset, will actually depreciate faster than aircraft in the long run.

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