xAI is looking more like a datacentre REIT than a frontier lab • Hacker News Board

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

#251

Post by adjejmxbdjdn » Mon, Jun 08, 2026, 10:08 PM UTC

bko wrote: post #128

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?

Or, hear me out, maybe there's a compute shortage and xAI has compute and manages that well. There are no dark GPUs. Compute translates directly to money for these frontier labs. I think everyone is reading way too much into this. Sure there is some circular transactions that are sus, but this ain't it.

Compute is also a rapidly depreciating asset.

I want to make a comparison with a car rental business and say that it would be like valuing Hertz entirely on the basis of the number of cars they own, as opposed to how many they rent out, but cars have a much longer depreciation period, if there are no customers they’re not costing you more money, unlike your computer which you are using for training and sucking up massive amounts of energy, and those cars do maintain decent value even after they’re of little use to the car rental company, unlike the compute here.

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

#252

Post by fc417fc802 » Mon, Jun 08, 2026, 10:09 PM UTC

philipallstar wrote: post #153

timacles wrote: post #145

Earlier quoted context omitted.

We are basically dealing with the fallout of the 2008 GFC bailout to this day. The fiat economic system is irreparably broken, and we are circling the drain. Another bailout is _probably_ inevitable. But the cycle sure as hell isnt resetting and we are speeding towards something... what it is is unclear though, and when is also unclear. The part people cant wrap around is the scale of it and the time it takes to go t…

Sigh, no. Money is not flowing; company valuation might be, but that's temporary and only works if the company keeps delivering insane amounts of value.

So the founders sell plenty of stock while the price is high and then when their valuation crashes sure they "lost" half their net worth but the other half is still there.

I'm not saying that's what's happening, just making it clear that company valuation not being permanent is not a valid argument against money flowing to the top.

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

#253

Post by throw-the-towel » Mon, Jun 08, 2026, 10:10 PM UTC

hdndjsbbs wrote: post #200

throw-the-towel wrote: post #146

Earlier quoted context omitted.

The middle class resists it because we know who will be taxed through the nose to fund this safety net. Hint: it's not the ultra rich.

Why the fuck not? This is such a stupid perspective, "we shouldn't make things better because I imagined a way it could be bad".

It's you who is imagining things here, I'm speaking from my actual experience in an EU country.

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

#254

Post by maxdo » Mon, Jun 08, 2026, 10:15 PM UTC

It’s a vertical company they did compute very good , their top model bounce between top tier and -1 -2 gen. They were top tier only once though on paper briefly . If tomorrow thy will hit top tier , that do have know how to expand . They can even buy back from Google or anthropic if they agree.

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

#255

Post by colechristensen » Mon, Jun 08, 2026, 10:19 PM UTC

SlinkyOnStairs wrote: post #47

colechristensen wrote: post #34

Earlier quoted context omitted.

>What happens when the music stops? Bubble bursts, somewhere between 2008 housing crisis and the dotcom bust. Really dependent on if there are any OTHER structural problems to compound a fast re-valuation of tech stocks. There's plenty of noise about banks holding large amounts of bad private credit debt. There could be a lot or only a little collapse. There's so much uncertainty and the combination of war, high oil…

> There's plenty of noise about banks holding large amounts of bad private credit debt. This is still only big enough to cause funny banking collapses not actual 2008 scale financial disasters. Banks hold a lot of bad debt, but it's isolated from consumer accounts. Might not want to hold equity in SoftBank though. > There's so much uncertainty and the combination of war, high oil prices, and uncertainty about tarriff…

>This is still only big enough to cause funny banking collapses not actual 2008 scale financial disasters. Banks hold a lot of bad debt, but it's isolated from consumer accounts. Might not want to hold equity in SoftBank though.

Banks are lending to these private funds that are packaging questionable loans into securities (as opposed to banks giving loans or companies issuing bonds). This is the post-2008 place for people to get highly leveraged loans and they probably need to be better regulated.

But yes it doesn't seem like private credit alone will cause problems, the concern I'm trying to outline is a few of these things happening at the same time causing a kind of collapse.

TACO uncertainty is strangely propping up asset values as there's always a credible thought that whatever is happening is pretend or going to be reversed soon. And the expectation that the fed isn't independent any more and will make decisions to prolong the bubble resulting in a bigger crash ambiguously far into the future. Few want to start shorting because they have no concept of how long the market can stay irrational or if 20% inflation might be around the corner instead of a popped bubble.

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

#256

Post by adammarples » Mon, Jun 08, 2026, 10:21 PM UTC

bpodgursky wrote: post #112

chris_money202 wrote: post #87

Earlier quoted context omitted.

Think two things can be true at once. They should be using their capital to achieve their speculative price. Instead, they are using their capital to achieve a modest ROI, thus invalidating the speculation AND proving they have tech issues in what the speculation is around.

They are making $24B/yr on datacenters they built in < 2 years for $2-3B. To call that a "modest ROI" is... quite a statement.

It's right in the article, there were 40bn of disclosed costs. It's still a good return, it pays for itself in 18 months, but if you build and rent data centres, then that's your business, and you're not likely to 100x in 3 years, which is the wild projection behind their valuation.

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

#257

Post by pseudosavant » Mon, Jun 08, 2026, 10:23 PM UTC

nonethewiser wrote: post #79

Weren't we just talking about how SpaceX is valued based on some profits from starlink + tons of speculation? Yet when we learn of this new $26B in yearly revenue (2.2B/month from Google and Anthropic)the conversation does not return to that discussion. It transforms into: "xAI's tech sucks" "Google/SpaceX is Structurally Bad for the Economy" etc This is called motivated reasoning. We get new information and instead…

I think the point is, that although at least xAI is monetizing their GPUs/datacenters, they are doing so at a REIT/rental multiplier instead of a frontier lab multiplier.

Clearly, xAI thinks this is the best way for them to extract value out of their assets.

Also, it is clear that Google and Anthropic both think they can extract more value out of those assets than they will pay in rent to SpaceX.

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

#258

Post by oblio » Mon, Jun 08, 2026, 10:23 PM UTC

JumpCrisscross wrote: post #244

oblio wrote: post #229

Earlier quoted context omitted.

I listed a bunch of data points that make no sense (profits spiking 50% in a non-Christmas quarter for companies) and weren't directly tied[1] to the circular financing. [1] They're indirectly tied to it.

> that make no sense (profits spiking 50% They were unrealized gains on non-marketable equities. It’s clearly disclosed and done according to GAAP. It’s put under other income precisely so analysts can strip it out when modelling long-term trends. Like, yes, if SpaceX goes to zero Google would have to realize losses and probably lose a quarter or two of GAAP profits. (But not cash flows. Cash-flow wise, it may wind u…

> but far from making no sense.

When I said "it makes no sense", I didn't mean "the accounting math doesn't work out". I meant "raising a potential conflict of interest among related parties".

This whole AI financing this is the motherlode of "potential conflict of interest among related parties".

And people who are obtuse enough to ignore this because it's not illegal right now will discover 5-10 years from now that laws are written in blood (or massive bankruptcies).

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

#259

Post by fc417fc802 » Mon, Jun 08, 2026, 10:23 PM UTC

vitally3643 wrote: post #199

shmel wrote: post #167

Earlier quoted context omitted.

or, hear me out, we can try the Irish way? Just let them fail ffs

Unfortunately, the entire US economy is being propped up on AI stocks. If they are allowed to crash, the consequences would be extreme all across the board. See the recent worming into index and pension funds. If they collapse now, a lot of regular people are going to get wiped out. Should the government bail them out or somehow stop the collapse? Arguable. Will they anyway? Almost certainly. These companies have eng…

> These companies have engineered themselves into a position where being allowed to fail would wreak catastrophic damage

Where is this assumption of malicious intent coming from? This has all been fueled by a global AI hype that might or might not prove to be justified in the end. The overall economic situation looks (IMO) quite similar to that of the railroads in the US and those did ultimately fail and were nationalized(ish).

The current situation is hardly limited to the US and capitalism. China also appears to be actively reorganizing their economy around AI.

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

#260

Post by chatmasta » Mon, Jun 08, 2026, 10:33 PM UTC

SecretDreams wrote: post #227

chatmasta wrote: post #217

Earlier quoted context omitted.

xAI covers their cost of N-1 datacenter while running their own models in N and building out N+1.

And they make all of their money from the N-1 data center they are renting which is sand moat. What point are you making?

What? They make money from their own inference and models too, which they can train effectively for free by funding their operations with rental income from their last gen datacenter.