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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

#631

Post by JumpCrisscross »

l23k4 wrote: post #524
u1hcw9nx wrote: post #391

Earlier quoted context omitted.

the problem: The Nasdaq 100 and FTSE Russell made a rule change that allows SpaceX to enter index without mormal time for price discovery. Most index funds have rebalance day just 5 days after IPO. S&P also made rule change for S&P Total Market Index and Dow Jones US Total Stock Market Index, but left SP500 intact. Nothing wrong with SpaceX or Anthropic getting into indexes with fair rules, this rule change is pure c…

[flagged]

Musk is highly unpopular, and some conspiracy theorists linked financial arcanity to him in a way that sounds compelling and hidden. If you push back on the corruption claim, you’re in Musk’s pocket. The same folks who became armchair bank experts in 2023 now confidently make statements that middle 401(k)s and pensions, or the NASDAQ 100 (for whom this has probably been the most brilliant marketing move in their history, nobody talked about that index before) and the S&P 500.

At the end of the day, some RIAs in the Bay Area made bank on folks churning their retirement accounts. Some influencers got clicks. Otherwise, this is a nothing burger.

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

#632

Post by [deleted] »

dyauspitr wrote: post #443
carefulfungi wrote: post #385

Earlier quoted context omitted.

The problem described isn't companies buying goods and services. It's buying from an entity they partially own and then profiting as that entity becomes more valuable because of the purchase.

It’s still very tenuous you can’t prevent companies that own 5% of other companies from buying services from the that company

[deleted]

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

#633

Post by manlymuppet »

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…

But Google loses $11 billion per year, and they gain $50 billion... in stock?

As far as I know they really will be paying $11 billion annually in liquid cash to SpaceX (not a small ask) starting this year, and all they get in return is more money on paper?

What incentive do they have to help SpaceX out like this at great cost, if they're not actually buying something valuable? Why are they incentivized to do this if it's just an empty deal and financial engineering? Genuine, good faith question: what are they getting out of this?

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

#634

Post by PeterStuer »

adgjlsfhk1 wrote: post #586
PeterStuer wrote: post #366

Earlier quoted context omitted.

So SpaceX is selling inference capacity. Who else is? What were the competing offers for Google and Anthropic?

anthropic isn't selling capacity. they're using all of theirs and more

Anthropic is buying a lott of inference from SpaceX. Where else could they have turned?

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

#635

Post by ikiris »

anukin wrote: post #531
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.

Why was it not outlawed post dotcom crash? This was exactly the thing that led to the dotcom crash.

It all was many years ago after the great depression, and similar. Then people kept voting in republicans who's life mission is to gut the SEC and all related regulation keeping them from doing things like this.

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

#636

Post by cavemandaveman »

sebastos wrote: post #563
kjshsh123 wrote: post #393

Earlier quoted context omitted.

But you can transfer your ownership.

And you can sell your tulip. But if the mania stopped and you suddenly _couldn’t_ find another person to sell it to, would you now be upset you paid $5000 for a tulip? What’s the value at which you wouldn’t be upset? Ok, that’s the intrinsic value of a tulip to you.

Berkshire Hathaway doesn't pay a dividend yet the business has steadily grown more valuable

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

#637

Post by polski-g »

softwaredoug wrote: post #570

> compute from its Colossus 1 data center near Memphis, Tennessee, that xAI — now part of SpaceX — originally built for its own artificial intelligence efforts. Is this the same Memphis data center notorious for burning jet fuel nonstop for power?

What would you prefer it to burn instead?

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

#638

Post by JumpCrisscross »

delecti wrote: post #505
laughing_man wrote: post #446

Earlier quoted context omitted.

There would be some benefits, assuming you could do it for a reasonable cost. For one, you have effectively uninterruptible power using solar panels in space. And it's free, too, once you have the hardware in place. And you don't have to deal with any of the site selection stuff you have for terrestrial data centers. No NIMBYs. No politicians trying to extort bribes. No water problems. In space there are no earthquak…

Yeah, launch costs alone make it infeasible, and power being "free" exacerbates the cost (gotta get all those panels up there). Cooling is also dramatically harder, plus shielding, and it makes repair/upgrade basically impossible. I'm not going to assert that large scale space compute will never happen, but I feel confident saying it won't happen this decade or next.

> launch costs alone make it infeasible

Last time I did the math, launch costs were well balanced against permitting delays (mediated by interest rates). The break even rests almost entirely on radiator mass efficiency (which is, admittedly, a function of launch costs).

Like, if everyone’s terrestrial datacenter projects start getting blocked, and demand for AI continues, the price a rational buyer would pay for in-orbit compute could get ridiculous enough to break even on current kit. And current kit in launch vehicles, radiators and solar panels is advancing.

I don’t think the thesis is met yet. But it’s less ridiculous than I thought it was before I sat down with pen and paper.

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

#639

Post by simonebrunozzi »

manlymuppet wrote: post #633
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…

But Google loses $11 billion per year, and they gain $50 billion... in stock? As far as I know they really will be paying $11 billion annually in liquid cash to SpaceX (not a small ask) starting this year, and all they get in return is more money on paper? What incentive do they have to help SpaceX out like this at great cost, if they're not actually buying something valuable? Why are they incentivized to do this if…

I would bet that there is a nice clause in that contract that gives exit options to Google at year 1, 1.5, 2, etc.

Perhaps they only need to pay $11B, or $16.5B, before exiting the contract.

Plus, instead of getting nothing for these $11B/year, they surely get some compute power that should have some value.

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

#640

Post by arbirk »

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…

And that grants S&P (plus the existing NASDAQ indices). All US pensioners are bagholders for an illegal immigrant lol
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