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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

#791

Post by MichaelNolan »

credit_guy wrote: post #729
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!

The doubt you are expressing was very justified until this week. But on June 1st, Microsoft changed the pricing for business and enterprise Copilot, and people started paying real money for using AI. Until that day, Github Copilot was charging users 4 cents per request (if they exceeded their subscription's monthly limit). Now, they charge at the API rate. I monitor my usage, and it's easily 10 times more expensive t…

> but most of them will just pay 10 or 20 times or more for AI than they used to pay until now.

At my work, after the GitHub price hike, we all got the option of 1. Keep using Github, but with the same total spend as before. i.e, use 1/20th as much since the dollar cap isn't changing. Or option 2, use as much self hosted DeepSeek v4 Pro, Qwen 3.6, Gemma4 as you want since it's almost free. (to be fair, we already had the GPUs)

If the Chinese keep releasing open weight models that are "close enough" to the big 3, I expect many orgs to make the same choice. I think we will see VPs and higher start saying "you better have a good reason for using Opus 4.8 or GPT 5.5 Pro, do you have metrics showing ${cheaper_model} isn't good enough?"

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

#792

Post by queuebert »

bradleyjg wrote: post #745
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…

TIPS are yielding 2.1-2.75% _real_ across the curve from 10 to 30 years out.

Worth noting the cost of dealing with Treasury's absolute dumpster fire of a website, though.

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

#793

Post by omgwtfbyobbq »

throwawaycan wrote: post #763
omgwtfbyobbq wrote: post #761

Earlier quoted context omitted.

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

It might be. It might not be. That's where the money is or isn't.

I think the mature part of their business is 3/Y, energy storage, and maybe cybertruck, although I also think it's too early to call it because it depends on lower cost cell in house cell production and they only started that recently.

In the near term, the growth part is Semi, cybercab, FSD, lithium cell production, and maybe cybertruck.

In the long term, it's potentially Optimus, more general autonomy, and gigafactories.

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

#794

Post by trollbridge »

Imustaskforhelp wrote: post #475
trollbridge wrote: post #290

Earlier quoted context omitted.

Could you please describe the other satellite launch services whose prices are competitive with SpaceX?

If you are asking for government and research needs rather than commercial then ISRO (Indian space research organization) beats SpaceX That being said, ISRO focuses more on research and scientific world as compared to the commercial world but they were the least expensive option out there before SpaceX and the only differential which causes the pricing is actually re-usability aspect of SpaceX rockets/launchers and I…

So, in other words, launch is not actually a commodotised thing yet and there's nobody else out there that can actually beat SpaceX on price.

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

#795

Post by otterley »

tristanj wrote: post #692
manlymuppet wrote: post #633

Earlier quoted context omitted.

But Google loses $11 billion per year, and they gain $50 billion... in stock? As far as I know they really will be paying $11 billion annually in liquid cash to SpaceX (not a small ask) starting this year, and all they get in return is more money on paper? What incentive do they have to help SpaceX out like this at great cost, if they're not actually buying something valuable? Why are they incentivized to do this if…

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?

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

#797

Post by clusmore »

tristanj wrote: post #692
manlymuppet wrote: post #633

Earlier quoted context omitted.

But Google loses $11 billion per year, and they gain $50 billion... in stock? As far as I know they really will be paying $11 billion annually in liquid cash to SpaceX (not a small ask) starting this year, and all they get in return is more money on paper? What incentive do they have to help SpaceX out like this at great cost, if they're not actually buying something valuable? Why are they incentivized to do this if…

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…

I think your point still stands, but a correction that 1% of $6-7T is $60-70B, not $600-700B.

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

#798

Post by prewett »

WarmWash wrote: post #733
cavemandaveman wrote: post #636

Earlier quoted context omitted.

Berkshire Hathaway doesn't pay a dividend yet the business has steadily grown more valuable

Because dividends are stupid and Berkshire is smart. Share buybacks are the optimal way to do "dividends". The only reason to do a dividend is because people like the feels of getting a cash payout.

Dividends are also one way of income in retirement, much more predictably than selling stock. The yields are worse than bonds, but they can be considered to be mostly to rise with inflation, albeit on a year or two delay. Dividends also act as a discipline to keep management focused on the business, since you need to pay real money to shareholders, instead of just doing whatever good idea you have, regardless of whether it is a net benefit to the company.

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

#799

Post by worik »

JumpCrisscross wrote: post #696
worik wrote: post #689

Earlier quoted context omitted.

Yes. And just because yesterday's rules were "invest in S&P500" does not mean the governors of many (not all) funds cannot change the rules to dodge such blatant fraud The managers of huge funds are not complete idiots- far from it- and they will do what they can, most of them, to fulfill their duties

> just because yesterday's rules were "invest in S&P500" does not mean the governors of many (not all) funds cannot change the rules to dodge such blatant fraud There are no governors. The assets that automatically follow the S&P 500 are like individual IRAs. If a fund has a governing body, they're generally not indexing to a single narrow index like the S&P 500. They're going for a set of total-market funds, or they…

I said and I mean "huge", as in "very big"

Passive index investing was once the best strategy, perhaps is still. But in the face of such apparent malfeasance perhaps no longer

The big pension funds do have governors, they are mostly diligent and can change course

that will mitigate but not eliminate the downsides to this nonsense

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

#800

Post by BowBun »

layoric wrote: post #759
credit_guy wrote: post #729

Earlier quoted context omitted.

The doubt you are expressing was very justified until this week. But on June 1st, Microsoft changed the pricing for business and enterprise Copilot, and people started paying real money for using AI. Until that day, Github Copilot was charging users 4 cents per request (if they exceeded their subscription's monthly limit). Now, they charge at the API rate. I monitor my usage, and it's easily 10 times more expensive t…

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.
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