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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

#701

Post by worik »

tristanj wrote: post #675
krupan wrote: post #667

Earlier quoted context omitted.

Ok, now we are getting somewhere. There is no guarantee that they will be a big part of the stock market. It is not "absolutely" sure, for them or for any new public stock. That's why the indices have/had the the rules they (used) to have, to wait and see if a newly IPOed stock actually becomes a big part of the market before it becomes part of the index. Why did they change the rules for these companies? That's what…

Because the fundamental purpose of an index is to track the stock market. The S&P 500 benchmark was created in 1957 to benchmark the US stock market, decades before the first investment funds that copy it (by Vanguard, in 1976). The primary purpose of an index is to track the market. If an index excludes a significant part of the market it claims to track, then the index no longer accurately reflects the market, and…

> This is why many are arguing for fast-track inclusion...

History will be the judge.

But using nothing more than Occum's Razor and recent corporate history as a guide the reason that "...many are arguing for fast-track inclusion" is that they are crooked.

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

#702

Post by laughing_man »

delecti wrote: post #505
laughing_man wrote: post #446

Earlier quoted context omitted.

There would be some benefits, assuming you could do it for a reasonable cost. For one, you have effectively uninterruptible power using solar panels in space. And it's free, too, once you have the hardware in place. And you don't have to deal with any of the site selection stuff you have for terrestrial data centers. No NIMBYs. No politicians trying to extort bribes. No water problems. In space there are no earthquak…

Yeah, launch costs alone make it infeasible, and power being "free" exacerbates the cost (gotta get all those panels up there). Cooling is also dramatically harder, plus shielding, and it makes repair/upgrade basically impossible. I'm not going to assert that large scale space compute will never happen, but I feel confident saying it won't happen this decade or next.

When they get the kinks out of Starship, launch costs will be dramatically lower than we're used to thinking. They'll probably be using it to launch Starlink sats in earnest next year, so I don't think that would be the long leg.

I used to think heat would be a problem, too, but I've come around. It's a consideration, but it's doable. Remember we already have some pretty high power sats up there, so it's not something we haven't already been working around.

IMO the big cash drain will end up being maintenance, as in, you can't do it. If you have a box or a power supply fail on the ground you can swap it out. Anything in orbit would have to be replaced.

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

#703

Post by worik »

derektank wrote: post #496
matwood wrote: post #400

Earlier quoted context omitted.

Fun fact, both Enron and Lehman Brothers were in the S&P 500 when they went bankrupt. So yes, the whole market or even the market of the largest companies, includes some that may not be great companies. The beauty of the index is you don't have to know or care, since it'll take care of itself over time.

>The beauty of the index is you don't have to know or care, since it'll take care of itself over time As long as there are active investors in the market conducting price discovery. Which there always will be, just pointing out that someone has to care, even if you don’t

> As long as there are active investors in the market conducting price discovery. Which there always will be,

Passive funds dominate ow, don't they?

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

#704

Post by mtlmtlmtlmtl »

gigatexal wrote: post #357
nibbleyou wrote: post #354

Earlier quoted context omitted.

> masterful piece of financial engineering Love how we assign positive adjectives to unethical practices by corporates

I think the op was being a bit satirical

I don't think so, considering a substantial proportion of their comments on this site seems to be fanboying for SpaceX in particular and anything AI in general.

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

#705

Post by GMoromisato »

positr0n wrote: post #435
GMoromisato wrote: post #392

SpaceX valuation and ultimate success depends on two things: 1. AI demand continues to grow. 2. SpaceX's orbital data centers are profitable. If both of those are true, then their current valuation is absolutely justified. I'm confident #1 will happen. #2 is the big bet, and IMHO this is just an engineering/execution problem. All they need is (a) Starship to work reliably, and (b) a manufacturing line that can build…

Even if I do accept your claims that cooling in space is not insurmountable, you still would grant that launching and cooling (and shielding??) a data center in space still cost more dollars than building a data center on earth right? What is the use case that people will spend money to rent servers in space? I think nations have a strong enough grip on the internet now that the customer use case of "evading my count…

There is no physical reason why it can't be cheaper. For starters, solar power is 4x better in space, so you need 1/4th the area of panels. But also, data center costs are skewed by things like permits, environmental reviews, and (increasingly) lawsuits.

Terrestrial data center costs are only going up, while space tech costs keep going down. It is plausible (but not guaranteed) that they will intersect at some point.

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

#706

Post by GMoromisato »

pqtyw wrote: post #576
GMoromisato wrote: post #392

SpaceX valuation and ultimate success depends on two things: 1. AI demand continues to grow. 2. SpaceX's orbital data centers are profitable. If both of those are true, then their current valuation is absolutely justified. I'm confident #1 will happen. #2 is the big bet, and IMHO this is just an engineering/execution problem. All they need is (a) Starship to work reliably, and (b) a manufacturing line that can build…

Yeah sure the technical problems are solvable if you throw money at them. I'm sure we could have had a colony on Mars by this point as well if NASA/etc. continuously spent insane massive amounts of money on every year since the 70s. So what? Why on earth would you want an AI datacenter in space? Like what would you gain by doing that at an absurdly higher cost than you could build on them earth? "Free" energy? lol..…

You just said that "building your own datacentres is very expensive and more importantly takes a lot of time."

I agree. If building data centers in space is cheaper and takes less time, then that's a win and a clear reason to do it.

Costs for terrestrial data centers keep going up and costs for space tech keep going down. At some point, they will intersect.

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

#707

Post by tristanj »

bendbro wrote: post #382
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…

They still need 10% float and 1 year of bake time, so the rules are still doing some work for us

Float will be 40-50% after lockups expire later this year.

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

#708

Post by GMoromisato »

AtNightWeCode wrote: post #521
GMoromisato wrote: post #392

SpaceX valuation and ultimate success depends on two things: 1. AI demand continues to grow. 2. SpaceX's orbital data centers are profitable. If both of those are true, then their current valuation is absolutely justified. I'm confident #1 will happen. #2 is the big bet, and IMHO this is just an engineering/execution problem. All they need is (a) Starship to work reliably, and (b) a manufacturing line that can build…

2. SpaceX's orbital data centers are profitable. This will never happen.

I'm never that confident about the future, and I hope I never am.

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

#709

Post by trhway »

l23k4 wrote: post #534
lostlogin wrote: post #526

Earlier quoted context omitted.

I don’t think you have either? It’s and interesting point. I’ve done a bit of searching and am also empty handed.

>I don’t think you have either? I don't know how I could? The indices have already provided their reasoning for these rule changes, but that's just summarily rejected by the conspiracy-minded. To laymen this appears to be a grand conspiracy. Rules are being changed to accommodate big companies, that's usually bad. To people in the financial industry, it's fait accompli. The indices exist to reflect the market, these…

the explanation what i heard from some financial analytics is that small float with large valuation would create a dog pile/short squeeze type situation among the funds trying to reflect the SpaceX valuation vs. the whole index valuation - 1.8T vs 70T ratio would be 50B of float vs. 2T where is total of index funds is much larger than 2T, and that is even without accounting for retail investors and other, non-index funds, who will buy a part of float too thus reducing further the float available to the index funds. Such squeeze situation would lead to stock price rise leading to valuation rise, ....

>To people in the financial industry, it's fait accompli.

of course, they've engineered a new way of making even more money. The pile of passive money in ver low expenses index funds obviously have been a fat target for them.

>to reflect the market

the described above squeeze is hardly a way to reflect the market

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