"It will have to be paid for," they said. "It isn't natural, and trouble will come of it!"
Fellowship of the Ring.
Google to pay SpaceX $920M a month for compute capacity at xAI data centers
301–310 of 1001 posts
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#302Earlier quoted context omitted.
> 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…
> 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 sa…
lol, not sure if this is a joke, but Teslas do not have anything close to the necessary hardware to run grok locally.
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#303This 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…
Except they’re paying $30b (the deal is signed for almost 3 years), there’s no reason to believe that SpaceX maintains revenue multiples and this deal creates a trillion in value, liquid cash is not the same as pre-IPO shares. And finally, the deal comes down to $11 per hour of h100 equivalent, which is pretty much within market which experiences a severe lack of supply.
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#304This 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…
> 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.
The key there is "whole market." This is still a tiny sliver of the whole market and most people's exposure to it is minimal. Still a wealth extraction move ultimately, but like many other such moves, the few pull just a little from each of the many. Nobody individually goes broke, but the whole class gets slightly poorer. It takes a village to raise a billionaire!
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#305This 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…
> this single deal boosts SpaceX's valuation by 94 x 11 billion = $1 trillion dollars
That's not how valuations work. Also, it is not unlikely that SpaceX's valuation drops post-IPO (tech was 6.65% in the most recent trading session) due to its very rich valuation and a long tenured investor based that is probably looking to get liquid.
Google is renting compute from SpaceX because they need GPUs and SpaceX owns a huge supply of them and has excess capacity bc no one uses Grok. Google has stated that this is a temporary arrangement while they continue to build out their own capacity.
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#306> $920 million per month from October 2026 through June 2029 for access to “approximately 110,000 NVIDIA GPUs, CPUs, memory, and other related components.
That's about $8,400/month per "component" is that in the ballpark at all with what a month of dedicated/exclusive access to an NVIDIA GPU would go for?
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#307This 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…
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!
As an ignoramus to these things.... there are only just so many Googles though. Having made a significant jump, are they really expected to continue that growth?
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#308Earlier 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?
I mean, we all understand that this is some sort of circular financial play, but at the end of the day Google is paying SpaceX $1 billion for compute. This is no different from AWS or Azure.
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#309Since 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…
Circular financing at its finest. And Self-dealing between the hyperscalers, openai, and anthropic.
google invests in anthropic and spacex - and shows appreciated values as earnings. Then it turns around and rents tpus to anthropic to show it as revenues. The main buyers and sellers for all of this are the hyperscalers, openai and anthropic.
It is a game of musical chairs while the party is still on.
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#310You guys don't understand. Banks like JPMC will make billions on this IPO. Doing everything to prop it