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xAI is looking more like a datacentre REIT than a frontier lab

martinalderson.com

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Re: xAI is looking more like a datacentre REIT than a frontier lab

#91

Post by Brybry »

SecretDreams wrote: post #40
chatmasta wrote: post #26

Earlier quoted context omitted.

Datacenter operators who rent space are selling electricity. SpaceX is selling a fully built datacenter with compute designed for a specific purpose. They’re operating at a higher level of the value chain and can charge accordingly.

What's their novelty or moat to maintain the value chain? And why do we only see google, who already owns it, raising their hand to rent at these prices?

Anthropic is also paying $1.25 billion a month for xAI datacenter compute (though Google does own ~14%? of Anthropic too).

[1] https://www.businessinsider.com/spacex-ipo-anthropic-paying-...

[2] https://www.nytimes.com/2025/03/11/technology/google-investm...

Re: xAI is looking more like a datacentre REIT than a frontier lab

#92

Post by irishcoffee »

nemomarx wrote: post #76
nonethewiser wrote: post #70

Earlier quoted context omitted.

What's circular?

Google rents from SpaceX enough to show profitability, so that SpaceX can IPO and make googles early shares worth more than enough to pay for the renting they're doing. Great deal for Google but they end up basically just paying spacex to pay them back, right?

I believe you've described "investing with a hope for a profitable return" which is usually the point of investing.

Circular investing is a thing that is happening with all of these companies related to language models. Google hoping for a ROI isn't a great example of that.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#93

Post by SlinkyOnStairs »

treis wrote: post #59
SlinkyOnStairs wrote: post #45

Earlier quoted context omitted.

> the big providers are charging full freight for inference. Except they're not. Anthropic's claims of temporary profitability line up exactly with when SpaceX is giving them discounted compute, OpenAI's such a shitfest they threw the CFO off the glass cliff for daring to push back against the IPO. "Profitable on inference" is an unsubstantiated rumour. Just look at the copilot changes. Demand switching to other prov…

The pricing on Open router is clear. Anthropic, OpenAI, and Google all garner a massive premium over deepseek and qwen. There's no other realistic explanation except that they're making bank.

> There's no other realistic explanation except that they're making bank.

If they were, they'd never shut up about it. Yet they keep quiet about the financials.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#94

Post by NetOpWibby »

elorant wrote: post #78
TSiege wrote: post #6

> And Google is a major shareholder in SpaceX, so they certainly have incentive to juice the valuation of the IPO. Google own 5-6% of the shares of SpaceX. SpaceX is seeking a valuation of $1.77T which means Google's shares would be worth $88.5B-$106.2B. I'm not a skeptic of AI/LLMs but this makes me deeply suspicious of these circular deals. What happens when the music stops?

When the music stops we could start buying hardware again at rational prices.

This is what I’m looking forward to

Re: xAI is looking more like a datacentre REIT than a frontier lab

#95

Post by barrenko »

staplers wrote: post #86
downrightmike wrote: post #33

Earlier quoted context omitted.

Hyperinflation to make the needed bailout money

That's done quietly behind the scenes so leaders can blame something else for inflation. See "M2SL" or "TOTBKCR" on tradingview if you want to see inflation live.

Banks not needing people's money is quite a bad thing. EDIT: M1 looks like a damn sigmoid.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#96

Post by olyjohn »

irishcoffee wrote: post #92
nemomarx wrote: post #76

Earlier quoted context omitted.

Google rents from SpaceX enough to show profitability, so that SpaceX can IPO and make googles early shares worth more than enough to pay for the renting they're doing. Great deal for Google but they end up basically just paying spacex to pay them back, right?

I believe you've described "investing with a hope for a profitable return" which is usually the point of investing. Circular investing is a thing that is happening with all of these companies related to language models. Google hoping for a ROI isn't a great example of that.

Since when is leasing capacity in a datacenter considered investing?

Re: xAI is looking more like a datacentre REIT than a frontier lab

#97

Post by smallmancontrov »

drivebyhooting wrote: post #90
staplers wrote: post #86

Earlier quoted context omitted.

That's done quietly behind the scenes so leaders can blame something else for inflation. See "M2SL" or "TOTBKCR" on tradingview if you want to see inflation live.

I don’t understand how to read those charts.

Any time you see a price denominated in $, divide by that chart.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#98

Post by Analemma_ »

skybrian wrote: post #67
TSiege wrote: post #51

Earlier quoted context omitted.

If Alphabet can afford it why are they issuing $80B in new shares for fresh capital?

It makes good financial sense for a company to sell shares when the price is high and do stock buybacks when it's low. I guess they think the price is on the high side? Also, selling shares puts them in a better position to survive a downturn (more cash, less debt).

Google is also issuing a bunch of debt this year. It sounds like they need a lot of capital and want to keep a particular debt/equity ratio, rather than having a strong opinion on their share price.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#99

Post by nemomarx »

irishcoffee wrote: post #92
nemomarx wrote: post #76

Earlier quoted context omitted.

Google rents from SpaceX enough to show profitability, so that SpaceX can IPO and make googles early shares worth more than enough to pay for the renting they're doing. Great deal for Google but they end up basically just paying spacex to pay them back, right?

I believe you've described "investing with a hope for a profitable return" which is usually the point of investing. Circular investing is a thing that is happening with all of these companies related to language models. Google hoping for a ROI isn't a great example of that.

Buying the 5 percent stake is investing, but is paying them to be sure they can IPO normal? It reminds me more of Microsoft paying apple or Google paying Firefox or something.

Re: xAI is looking more like a datacentre REIT than a frontier lab

#100

Post by Qhemlomo »

skybrian wrote: post #65
Qhemlomo wrote: post #10

Earlier quoted context omitted.

At least Alphabet, Microsoft and Amazon can afford it. Nvidia is not losing anything if their stock falls. So whats left? The typical candidates of course: We poor people. 401k, ETF, etc. we pay the bill.

If the S&P 500 dropped 20%, that's about a year's growth. Long-term investors who bought before that would be poorer than they thought they were, but they're not worse off than they started and there wouldn't be any particular bill to pay. If they're a long term investor then they can wait for it to come back. (A similar argument could be made for larger drops.) The real suffering comes from whatever effect there is…

They can sit it out but that doesn't mean no one paid the bill.

And some others might need to pull out when its down.

Money doesn't appear out of thin air.

Why would it lead to recession if a handful of big companies lose money they have?

It will show that the USA is in a recession for sure, but otherwise

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