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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

#761

Post by omgwtfbyobbq »

rootusrootus wrote: post #336
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…

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…

PE isn't a great way to value a company in their growth phase.

Amazon's PE in 2013 was 3000+, but you'd still be up almost 20x if you purchased their stock back then.

https://www.theglobeandmail.com/investing/markets/markets-ne...

That doesn't mean Tesla or SpaceX are good buys though. Maybe they are, maybe they aren't.

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

#762

Post by nl »

ozgrakkurt wrote: post #690
missedthecue wrote: post #653

Earlier quoted context omitted.

You seem to be operating on the assumption that stock values are just totally and completely random and the fact that Google is worth $4T is just as much of a possibility as Hertz Rental Car being worth $1.5B If you disagree with the above framing, your reasoning will have to concede the existence of underlying value. Yes, obviously the price of a share is the result of the bid and the ask price in the order book. Bu…

That example is a bit extreme but I can give two more normal examples. Google/Nvidia and Apple/Nvidia. I don't think there is a world where nvidia will make more money than google or apple or keep making more money than them. Also another one is Tesla. In my opinion, there is absolutely no world where tesla is worth the current stock price if you compare it to chineese companies or some company like Toyota. Ofc at th…

It might pay you to look at the numbers.

Last quarter:

Goog: $109B revenue, $62B in profit.

NVIDIA: $81B revenue, $58B in profit.

NVIDIA is growing faster.

I agree about Telsa though.

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

#763

Post by throwawaycan »

omgwtfbyobbq wrote: post #761
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…

PE isn't a great way to value a company in their growth phase. Amazon's PE in 2013 was 3000+, but you'd still be up almost 20x if you purchased their stock back then. https://www.theglobeandmail.com/investing/markets/markets-ne... That doesn't mean Tesla or SpaceX are good buys though. Maybe they are, maybe they aren't.

Bus Tesla isn’t in anything looking like a growth phase

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

#764

Post by dhosek »

k2enemy wrote: post #723
Gareth321 wrote: post #580

Earlier quoted context omitted.

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…

> Bonds are no longer recommended. Current research indicates 100% equities to be the best composition leading up to, and past, retirement. Are you referring to Anarkulova et al? Might be worth mentioning that the fixed income part is replaced with international equity, not more domestic equity.

That’s been something I’ve started doing. The nice part of the bond chunk of my investment portfolio is the current income aspect of it, with monthly dividends that give an annualized return of a touch under 4% on top of the capital growth.

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

#765

Post by nish__ »

BLKNSLVR wrote: post #420

And SpaceX will spend $800M per month on Nvidia hardware purchase contacts, and Nvidia will spend $700M per month on Google services. I'm picturing a teenager blowing a bubble gum bubble bigger and bigger. I assume it can go on forever!

What is Nvidia spending so much on Google services for?

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

#766

Post by cman1444 »

sebastos wrote: post #556
hattmall wrote: post #423

Earlier quoted context omitted.

It's not purely the liquidation value, it's the idea that the liquidation value will continue to increase, or profits will be paid out to owners.

Yes, the profits it pays out are the one thing that actually makes sense, but the premise of the grandparent post was to ask what a share is worth _without_ dividends. And the answer is that shares are intrinsically worth very little. Liquidation value (actual liquidation - bankruptcy or going out of business or an exchange closure) is rarely ever practically realized for common investors. Even if you’re trading on t…

By this logic all money is inherently worthless too, and every time you buy a sandwich at the local corner shop you're just passing off that worthless piece of paper to the next schmuck.

In reality, things have value because people believe they have value. That doesn't mean every company that doesn't pay dividends is a speculative tulip bubble.

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

#767

Post by gommm »

k2enemy wrote: post #723
Gareth321 wrote: post #580

Earlier quoted context omitted.

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…

> Bonds are no longer recommended. Current research indicates 100% equities to be the best composition leading up to, and past, retirement. Are you referring to Anarkulova et al? Might be worth mentioning that the fixed income part is replaced with international equity, not more domestic equity.

What would you recommend to increase international equity exposure? Index funds ETF like VWRA?

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

#768

Post by gorgonian »

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.

As others have pointed out, bonds are barely (or not) keeping up with inflation. I would like to suggest a third alternative to stock index and bonds: stable dividend stocks. They should increase in value along with inflation but still pay out a steady dividend as long as the company is strong.

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

#769

Post by throwaway2037 »

rootusrootus wrote: post #606
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.

I'm technically not really in pure index funds, I just wanted to avoid trying to complicate my thoughts. Nearly all of my investments are in VFORX or Schwab's equivalent, and have been for a long time. So they are really composed of total market funds, bonds, etc, and Vanguard changes the ratio a bit as 2036 approaches. So while not really an index fund, from my perspective as a lay investor I treat it like that and…

I looked at the fund (VFORX) here: https://investor.vanguard.com/investment-products/mutual-fun...

It looks excellent for your needs, and have an incredibly low expensive ratio of 8bps(!). Currently, it is 75% stocks, and 25% bonds. Don't worry about a bubble in the stock market.

EDIT (after reading many, many more negative comments below):

The problem with discussing your investments online, there are a million negative replies. No one ever says: "Yeah, looks pretty good. Leave it alone." I'm here to be that guy.

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

#770

Post by throwaway2037 »

tony69 wrote: post #353
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…

Plenty of hedged equity funds out there. Trade some performance for peace of mind.

What is a "hedged equity fund"? Can you provide an example?
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