Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

cnbc.com

Post reply on HN
Print view View original

571–580 of 1001 posts

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

#571

Post by rbanffy »

BobbyJo wrote: post #363
amluto wrote: post #300

Earlier 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.

Number like this might appear when a company is expected to create a revolutionary thing that upends multiple markets. I would consider a number much larger than 3 in SpaceX’s case, but 94 feels, indeed, excessive.

It’s almost like the future we were promised in the 1960’s would immediately materialise the moment launch costs drop. Starship will be revolutionary if it pans out the way we expect (as the shuttle would have been, had it kept the low cost promise), but that’s not enough to warrant that 94 number.

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

#572

Post by krupan »

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…

I love this clip (this is the other guy that predicted the 2008 crash, played by Steve Carell in The Big Short). Cult Stock is a great way to think about it.

https://x.com/i/status/2061808563979251857

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

#573

Post by testing22321 »

gmd63 wrote: post #551
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 wouldn't call it brilliant. It's like cancer cells celebrating how fast they're growing.

Isn’t that the entire point of a capitalist economy?

What is the alternative?

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

#574

Post by bombcar »

l23k4 wrote: post #550
bombcar wrote: post #530

Earlier quoted context omitted.

If I were the DJI I would have proposed the change, simply so that we could get some outrage flowing and shut it down. Without the proposal, you'd have outrage out the other side that it wasn't included (especially if it shoots off like, well, a rocket).

But why? Won't that just make it far more awkward when they're inevitably forced to go through with very similar changes in the end?

Because now they can say "we considered it, there was strong opposition, and we didn't change the rules and what happened happened".

And if they miss out on part of a runup, and the companies later enter the index, what is the long term "harm" if any??

But if they're "right" it makes the competing indices look weak.

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

#575

Post by nullstyle2 »

l23k4 wrote: post #559
nullstyle2 wrote: post #553

Earlier quoted context omitted.

newly created alt because apparently my main account has hurt too many feefees to allow me to respond to a discussion I'm having. "posting too fast" my swingin dick... I'm not criticizing bloomberg, i'm criticizing you for posting paywalled links to support your position in an open discussion. Given I'm bailing on this convo now because hackers news is a shite application getting in the way of people trying to talk,…

[flagged]

and you assume these people don't have family offices filled with very well paid competence.

There was a 3 month gap between Matthew Lee raising the flag about unethical accounting practices at lehman brothers and the firm's collapse. My opinion is that we haven't hit the analgous moment yet but we will.

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

#576

Post by pqtyw »

GMoromisato wrote: post #392

SpaceX valuation and ultimate success depends on two things: 1. AI demand continues to grow. 2. SpaceX's orbital data centers are profitable. If both of those are true, then their current valuation is absolutely justified. I'm confident #1 will happen. #2 is the big bet, and IMHO this is just an engineering/execution problem. All they need is (a) Starship to work reliably, and (b) a manufacturing line that can build…

Yeah sure the technical problems are solvable if you throw money at them. I'm sure we could have had a colony on Mars by this point as well if NASA/etc. continuously spent insane massive amounts of money on every year since the 70s.

So what?

Why on earth would you want an AI datacenter in space? Like what would you gain by doing that at an absurdly higher cost than you could build on them earth?

"Free" energy? lol.. just build nuclear powerplants or loads of solar, wind and batteries on earth. Its still going to be cheaper...

> How is anyone going to compete with that? There are a bunch of data-center-in-space startups

A better question is why would anyone even try?

> are mostly leasing their data centers from someone else

It's really not. Building your own datacentres is very expensive and more importantly takes a lot of time. They need compute now, so it makes perfect sense to rent it from failing AI companies like xAI which bought a lot of chips but don't have anything to do with them since their models are just not very good.

> But if SpaceX has the cheapest data center with the most capacity, they will be able to extract profits

Well.. that would be a first one, since no similar industry works that way. Compute is a commodity so unless your literally run out of space on earth to build datacenters or Nvidia/etc. stop selling to anyone but SpaceX that can't really happen, can it?

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

#577

Post by adgjlsfhk1 »

doxeddaily wrote: post #509
Alive-in-2025 wrote: post #337

Earlier quoted context omitted.

Space data centers need years of time to design, build, and deploy, 5-10 at least, and that's after they solve their multiple very difficult or impossible problems. How will they cool them? There are just simple ideas like giant structures to radiate the heat away, but you say you need to put lots of mass in orbit? Like fsd, will take decades to figure things out.

SpaceX already has 10,000 satellites on orbit that are basically preview versions of space data centers. They've already paid 5 years of that 5-10 year timeline you outlined.

the math doesn't work. a starlink satellite has ~10kw power consumption. A single ai optimized server rack (GB300) is 140kw. Starlink works because you get a massive benefit from putting networking in space for rural users. no one has made a convincing case as to why putting a data center in space is a benefit that can come anywhere near the drawbacks (inability to service, launch cost, cooling etc)

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

#578

Post by bouncing_bolete »

matwood wrote: post #400
nibbleyou wrote: post #346

Earlier quoted context omitted.

I don't understand this logic. Does whole market mean scamming companies too?

Fun fact, both Enron and Lehman Brothers were in the S&P 500 when they went bankrupt. So yes, the whole market or even the market of the largest companies, includes some that may not be great companies. The beauty of the index is you don't have to know or care, since it'll take care of itself over time.

> it'll take care of itself over time

At least until it doesn't. If this spacex venture succeeds because it got propped up by index funds, then that's a decent indicator that more will follow.

It stands to reason that active investing will be more valuable as a result

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

#579

Post by ppseafield »

otterley wrote: post #386
tjwebbnorfolk wrote: post #378

Earlier quoted context omitted.

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.

SpaceX cannot report Google’s investment as revenue on its balance sheet. Full stop. Equity investments are reported as shareholder equity. If you don’t believe me, read FASB ASC 605-606, ask your friendly neighborhood CPA—or, perhaps so you’ll earn a valuable lesson about confidently spreading bullshit about subjects in which you are clearly uneducated (or, at best, superficially educated), try it yourself in a publ…

> Under the terms of the deal, Google will pay SpaceX $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 part is not equity - that's revenue for services rendered. But a commitment for nearly $1B/mo in revenue will likely increase SpaceX's share price, and Google owns some of those shares, so their holdings will increase in value.

Additionally:

> In Comments

> Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes.

https://news.ycombinator.com/newsguidelines.html

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

#580

Post by Gareth321 »

davedx wrote: post #484
rootusrootus wrote: post #336

Earlier quoted context omitted.

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…

Start gradually converting your equity to bonds is the standard advice on that timeframe. If you're dreading equity drawdowns, that's what fixed income is for.

Bonds are no longer recommended. Current research indicates 100% equities to be the best composition leading up to, and past, retirement.

To point, the economic uncertainties around geopolitics, AI, and war, plus irresponsible debt spending by governments and the prospect of QE (and higher inflation), is pushing long term rates steadily higher. There’s a reasonable chance that 30y treasuries are nearing 6% by the end of next year. Remember that rates and bond prices are inversely related. Anyone who holds bonds in this market will likely lose money. Holding to maturity won’t help much either because if inflation continues to rise, as is a major concern, most or all of that 5% yield gets eaten.

Post reply on HN