How can SpaceX have so much GPU spare capacity? It doesn't make any sense.
Did Musk blindly order humongous amounts of GPUs years ago before any of us had any sense of the scale this was going to reach?
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
#372> If SpaceX maintains this revenue multiplier Yeah, if a ridiculous premise is given you'll reach a ridiculous result.
It's not that ridiculous considering these are the current facts on the ground.
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#373Since 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…
TSLA has a forward PE of ~200x. That is probably the most logical comparison with SpaceX. Proof that the market can stay irrational for quite a long time. It fills me with a bit of dread about the future of the market. I am 10 years out from retirement, have a bit over 1M sitting in that market, and I wonder if it will implode in the meantime. I am fairly committed to the "invest like a dead man" (i.e. index funds, n…
About 10 years out as well. I’ve concluded I just invest a very balanced set of index funds and bonds and GICs across a handful of institutions, and then invest in my home because even if the housing market collapses I get to enjoy my nice home.
Other than that I’m just not over investing for retirement and instead making sure the money is spent today on family growth and experience.
I eventually just got tired of everyone with an opinion on what doing it right looks like or how to predict the market.
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#374How can SpaceX have so much GPU spare capacity? It doesn't make any sense. Did Musk blindly order humongous amounts of GPUs years ago before any of us had any sense of the scale this was going to reach?
They acquired xAI
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#375380 dollars per second... Good to know I could afford my own data center for an appreciable fraction of a minute.
Why would you want to own your own giant datacenter? What would you do with it? Of course it's expensive to operate a datacenter that serves millions of people.
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#376This 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 cu…
Yeah, only a small portion of SpaceX's revenue actually comes from Space (payload delivery). At this point they are basically an ISP (Starlink) and a datacenter/leasing company.
It's not clear if Musk (SpaceX/X.ai) is really pursuing AI any more - I expect he hasn't necessarily given up on it, and he hasn't said he has, but it seems he's rented out almost all of his GPUs to Anthropic and Google, so that's not going to be much of a revenue generator, at least for time being.
It was in the news not too long ago that Musk was looking to use Samsung to fabricate "AI chips", presumably either for X.ai and/or Tesla, so perhaps he's basically put X.ai on hold until he can reboot his efforts with his own chips (& perhaps a new datacenter)?
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#377Earlier quoted context omitted.
P/E is price to earning. Price to revenue is P/S. AER's P/S is like 3, so the discrepancy is much worse than you think. Sidenote: 3 is actually high. 94 is absolutely ridiculous.
The question on my mind is-is this IPO designed to rip off recreational passive investors and those of us that invest in retirement accounts?
With the Nasdaq rule changes, almost certainly.
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#378This 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 revenu…
An equity interest in a company is a perpetual claim on future profits. Equity IS securitized profits.
Google's purchase sends cash to to SpaceX, which they report as revenue, and which they earn a profit from.
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#379Earlier quoted context omitted.
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 cu…
P/E is price to earning. Price to revenue is P/S. AER's P/S is like 3, so the discrepancy is much worse than you think. Sidenote: 3 is actually high. 94 is absolutely ridiculous.
> Sidenote: 3 is actually high.
Do you mean low? AAPL has a ps of 10.
Re: Google to pay SpaceX $920M a month for compute capacity at xAI data centers
#380Is 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?)
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.
> 90-day cancellation clause
In other words, this is a fake IPO booster