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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

#321

Post by nrclark »

deadbabe wrote: post #318
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 you want to play “active investor” and pick and choose what companies you invest in, don’t be surprised when you underperform the whole market. SpaceX could rise to be a major winner that makes people a lot of money. And then what? You missed out and underperform the whole market.

OK, but SpaceX is not printing money out of thin air. And neither does the stock market. Somebody will be left holding the bag eventually.

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

#322

Post by benl »

zdragnar wrote: post #307
benl wrote: post #234

Earlier quoted context omitted.

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?

The bet is that demand for AI tokens will continue to grow exponentially. And that SpaceX will be able to deploy and rent out GPUs to serve those tokens faster than anyone else.

The wrinkle is that they are planning to deploy those GPUs in space. That’s what people are most skeptical about, I think!

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

#323

Post by bwfan123 »

spunker540 wrote: post #60
cameldrv wrote: post #49

Do people think those numbers are correct? 920 million a month for 110,000 GPUs is $11.61 per GPU hour. That seems very high to me.

I think in the case of supply-constrained GPUs, you can get the opposite of a volume discount. Google has the most capacity of anyone, the fact they’re paying so much per month to spacex is pretty remarkable

You could also read it the other way. That there is a lot of stranded gpu-capacity which is not being allocated correctly. And buyers would rather rent - than build out themselves.

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

#324

Post by missedthecue »

theturtletalks wrote: post #287
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.

The value of the stock is your share in the underlying business. Because underlying business changes over time (hopefully for the better) you are not simply hoping another shmuck pays you more, like with tulips, whose underlying value does not change with time. You own a portion of a concern that is improving its own fortunes.

Furthermore, dividends are approved by the board once per quarter or once per year. A dividend on a stock is not a contractual guarantee like it is on a bond. Therefore, it cannot be a basis of value.

With your logic, Berkshire Hathaway is a long-running greater-fool tulip bubble whose shares are only bidded up by finding more shmucks.

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

#325

Post by dawnerd »

dgellow wrote: post #237
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.

That would require regulators to actually pay attention, something they haven’t done actively since a long, long time

First step would be to prevent the regulators from profiting to begin with.

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

#327

Post by kennywinker »

MrMorden wrote: post #271
kennywinker wrote: post #220

Earlier quoted context omitted.

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.

So, somehow the servers can run hot in space without a problem?

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

#328

Post by dawnerd »

zozbot234 wrote: post #215
ajross wrote: post #199

Earlier 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…

Who’s going to be paying for the energy? People have been floating using the cars as compute for years and it just doesn’t make any financial sense for anyone.

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

#329

Post by hellojimbo »

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.

I thought elon hates demis

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

#330

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]
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