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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

#851

Post by tristanj »

otterley wrote: post #795
tristanj wrote: post #692

Earlier quoted context omitted.

The contract has an exit clause, either side can terminate the agreement with 90 days notice. I do not expect this contract to last the full 3-year term. And this deal protects Google's investment. Google owns close to $100 billion of SpaceX stock. This deal increases SpaceX's revenue by 30%, and pushes SpaceX into profitability. With this deal, SpaceX is eligible for S&P inclusion. Assuming $6-7 trillion in S&P 500…

> This deal increases SpaceX's revenue by 30%, and pushes SpaceX into profitability. With this deal, SpaceX is eligible for S&P inclusion. You keep saying this even though you don’t present any evidence that it will make SpaceX profitable. Where are your numbers?

SpaceX announced $26B/year in compute deals with Anthropic and Google in the past week. The margins on both deals are incredibly high, Google is paying around $11.75/hour per GPU. Infrastructure costs are far below that, SpaceX likely has 70-90% margins. These two deals are around $20B/year profit. In the preliminary S-1, SpaceX reported a $5B loss in 2025. Combining these numbers, that's a $15B profit, assuming losses are constant. Likely expenditures will increase, but even if losses double, that's a very healthy $10B profit.

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

#852

Post by gmerc »

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…

Profit … to be seen. Compute is not a high margin business and Colossus was idle for enough of its depreciation timeline to put a question on profit. In any case none of this is a better investment than Nvdida because that’s where all the money is going

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

#853

Post by LadyCailin »

ertian wrote: post #679
bmitc wrote: post #541

Earlier quoted context omitted.

Musk is a walking and talking financial fraudster and criminal and somehow keeps getting away with it.

Someday, Americans may punish him with a presidency.

Not unless the constitution changes first. You have to be born in America to run for president.

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

#854

Post by th234oi34087 »

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…

> To say SpaceX is overvalued is to even beginning to convey the magnitude of the situation. It's going to be very painful when the valuation normalizes.

The scale of corruption in trying to use Index-Funds and Retail investors as the exit liquidity to bail out the VCs who were pumping the AI hype is unheard of.

It's become so damn brazen! I'm surprised Musk's image hasn't crumbled in front of his fan-bois.

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

#855

Post by throwaway2037 »

oezi wrote: post #826
mafuy wrote: post #814

Earlier quoted context omitted.

I do not understand how you can talk about US, EU and Japan but not mention China. Because I'd bet China is in a similar league and has better prospects than any of the three.

China's equities aren't really tradable. If they were it would be nice.

This is incorrect. There are lots of ETFs that now directly hold China A shares. CSI 300 index is the equiv of S&P 500 in mainland China. Also, via HK Stock Exchange, you can buy China A shares via "northbound connect". A broker like Interactive Brokers supports this type of trading and the bizarre/special currency (CNH) required for it. That said, I excluded China because it is not developed and has awful transparency.

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

#856

Post by arder »

est31 wrote: post #164

These deals are part of how the AI economy operates. Amodei has explained this in his recent Patel podcast. 1. Building datacenters takes time. Months, if not years. They take billions of investment. 2. AI revenue is highly unpredictable. Sure, you can make predictions, but maybe your competitor releases a better model 2 weeks after your release, maybe the new model you built isn't as much better, maybe the chinese m…

This is only a partial solution to a problem though. If x ai fails to build a good model they rent to Google. But that means all these companies are incentivised to build as much compute as possible. If they win their margins look great, if they lose they still make money. BUT at some point aggregate supply will outstrip aggregate demand and the bottom will fall out of the market.

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

#857

Post by SkiFire13 »

Robotbeat wrote: post #754
kube-system wrote: post #748

Earlier quoted context omitted.

Comcast is a successful business in spite of their customer satisfaction. You don’t need to please your customers when when you can involuntarily extract their money anyway.

Comcast is not a rapidly growing company, though. This isn’t hypothetical. SpaceX is increasing Starlink revenue by like 50% per year. And their current Starlink constellation, about 10,000 satellites, has been launched entirely by Falcon 9. They’ve been waiting to launch much larger satellites on starship (in fact they had versions of these ready for several years now, and recently did suborbital tests of some of th…

You're trying to justify SpaceX's valuation using Starlink, but it's clear from the S-1 that it makes up only for ~5% of SpaceX estimated TAM.

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

#858

Post by simondotau »

sroussey wrote: post #777
davedx wrote: post #478

Earlier quoted context omitted.

Eh, Tesla had a relatively normal growth company valuation for a while when they were growing strongly. The problem is the stock still hasn't compressed the multiple back down as growth stagnated... because the market swapped out "valuation based growth" for "call option on robotaxi success" at the blink of an eye.

The truly terrifying thing is that someone could short the Musk companies, and with one bullet can cause them to drop 50-90% right away (thanks to meme-ness). And they are valued so high that such a person could make billions overnight, maybe 10s of billions. Terrifying to be Must or anyone that shares a car or plane with him.

Add that to the litany of reasons why shorting should be illegal. There is some value to shorting, but it doesn't justify the consequences.

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

#859

Post by mullingitover »

LadyCailin wrote: post #853
ertian wrote: post #679

Earlier quoted context omitted.

Someday, Americans may punish him with a presidency.

Not unless the constitution changes first. You have to be born in America to run for president.

If you bribe five members of the Supreme Court, the Constitution can be whatever you want it to be.

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

#860

Post by layoric »

BowBun wrote: post #800
layoric wrote: post #759

Earlier quoted context omitted.

What makes you think “most of them will just pay 10 or 20 times more for AI”? They can’t measure ROI, and it will start costing more than their staff. You might be right, but I can’t think why any competent C suit would agree to this..

Look at cloud spend - how many of your employers have measured the ROI of using cloud vs. self-hosting? At a certain point these things just become the cost of doing business I suppose.

Every single one minus Federal Gov. if you are in a leader position you absolutely should be assessing hosting options, trade offs, costs etc, and looking forward as things grow to make sure you aren’t just burning cash. Only my experience from Australia, the low interest environment could be different in the US, but I would expect this attitude to change if interest rates stay above 5%.
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