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

Post by gretch » Sat, Jun 06, 2026, 9:30 PM UTC

Gareth321 wrote: post #580

davedx wrote: post #484

Earlier quoted context omitted.

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…

Post by tristanj » Sat, Jun 06, 2026, 9:32 PM UTC

manlymuppet wrote: post #645

simonebrunozzi wrote: post #639

Earlier quoted context omitted.

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.

That's what I'm saying though. They must be getting something out of this deal, otherwise why would they be going through with it? The explanation that this is just financial engineering (which to me, means neither Google nor SpaceX is getting anything out of this other than looking better on paper) doesn't make sense to me. How does this financial engineering benefit Google? Even if they have an exit option, why is…

Post by JumpCrisscross » Sat, Jun 06, 2026, 9:35 PM UTC

manlymuppet wrote: post #645

simonebrunozzi wrote: post #639

Earlier quoted context omitted.

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.

That's what I'm saying though. They must be getting something out of this deal, otherwise why would they be going through with it? The explanation that this is just financial engineering (which to me, means neither Google nor SpaceX is getting anything out of this other than looking better on paper) doesn't make sense to me. How does this financial engineering benefit Google? Even if they have an exit option, why is…

Post by downrightmike » Sat, Jun 06, 2026, 9:36 PM UTC

amluto wrote: post #300

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 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…

Post by dyauspitr » Sat, Jun 06, 2026, 9:40 PM UTC

carefulfungi wrote: post #644

dyauspitr wrote: post #443

Earlier quoted context omitted.

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

If the parent comment is true, it seems the problematic aspect is the leverage created by the P/E ratio more than the percentage of ownership. What a weird situation.