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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

#841

Post by SkiFire13 »

Gareth321 wrote: post #580
davedx wrote: post #484

Earlier quoted context omitted.

Start gradually converting your equity to bonds is the standard advice on that timeframe. If you're dreading equity drawdowns, that's what fixed income is for.

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…

> Remember that rates and bond prices are inversely related. Anyone who holds bonds in this market will likely lose money.

That's assuming you sell the bonds before their end.

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

#842

Post by matwood »

runako wrote: post #616
krupan wrote: post #585

Earlier quoted context omitted.

There are lots of US companies that pay dividends. Another commentor lists some tech companies that do, and there are lots of other types of businesses that do. A quick internet search will give you a list. You are correct that stock buybacks are another way that companies reward their shareholders.

Good call. I should have said that most of those companies also do buybacks as part of their capital return strategies.

And, as an investor I absolutely prefer buybacks so I can control my tax liability.

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

#843

Post by worik »

l23k4 wrote: post #831
worik wrote: post #799

Earlier quoted context omitted.

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

> But in the face of such apparent malfeasance perhaps no longer Do you have any sources to share in support of this claim of malfeasance?

> Do you have any sources to share in support of this claim of malfeasance?

Not here, this is a casual discussion not a scientific seminar.

But use Occam's Razor and modern history

Point 1. Corruption has penetrated the highest echelons of USAnian politics. The president is unabashed in his corruption and has corrupted (is corrupting) the financial regulators (I follow Molly White who has been particularly good on this)

Point 2. Space-X is valuing itself at an astonishing value that is not anchored in its business activities. This has been covered a lot in comments here but also see Patrick Boyle's excellent commentary.

Point 3. The purveyors of these IPOs have been doing their best to get the rules changed (because reasons blah blah blah), the change will mean that managed funds, if they follow their usual practice, will feel compelled to buy in at the offer price - a massive inflow of capital that will make many people incredibly rich.

Putting all this together - a culture of corruption that has reached the pinnacles of the financial system, outrageous valuations and open conspiring to change the rules in favour of the whole scheme leads me to the conclusion that I am looking at the biggest (what is effectively the) fraud in history

I hedge my comments "effectively the" as I cannot be sure that this is conscious theft, or whether it is a confluence of powerful people facing juicy incentives who going with the flow are heading to a massive wealth transfer from working people (via pension funds) to elite capitalists

I do not think that this is not apparent to the governors of these huge pension funds. Those that have not tied themselves to an index following strategy will opt out I am sure - they are smart, studious and dutiful people by and large. So the people perpetuating this fraud may well be unable to pull it off.

But these are very worrying times. Especially for the USA.

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

#844

Post by worik »

l23k4 wrote: post #832
worik wrote: post #686

Earlier quoted context omitted.

> It will absolutely be untenable to keep Anthropic , OpenAI and SpaceX off the S&P 500 with them also being the highest valued companies on the market. Following the rules of passive indexes is the whole point. Mēh! The passive indexes (biased to a momentum strategy, so not really passive - they are too big) may have had their day. The blatantly corrupt move to change the rules was clearly an attempt to game them, a…

>Following the rules of passive indexes is the whole point. The whole point of these indices is to represent the market, the rules are unsustainable if they cause too big of a divergence from that goal. > The blatantly corrupt move to change the rules Why do you think nobody in the financial press is reporting on this blatant corruption? Is it because this conspiracy also includes all of the news media?

> Why do you think nobody in the financial press is reporting on this blatant corruption?

They are

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

#845

Post by Slothrop99 »

fc417fc802 wrote: post #737
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…

> Comcast is one of the best-run ISPs You mean the company with such a bad reputation that it had to aggressively rebrand? I take it you've never had the displeasure of doing business with them. That said it wouldn't surprise me in the slightest to learn that it was one of the most profitable ISPs for investors. That would fit quite well with the general theme of prioritizing the interests of investors over all else.

> aggressively rebrand

That had to be 20 years ago? Not that anyone likes the cable company.

As a comcast customer, their core internet service seems really solid. It comes in through some sketchy 1980s cables installed by some company who got bought by some company who got bought by Comcast. So occasionally a router in the back of a gas station blows up, the cable system wasn't exactly built to AT&T standards.

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

#846

Post by trhway »

l23k4 wrote: post #824
trhway wrote: post #709

Earlier quoted context omitted.

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 f…

>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. Are you planning to substantiate this conspiracy theory in any way?

Where do you see a conspiracy theory? I've shown the numbers, it is simple arithmetics.

The situation is similar with mortgage CDS back then - no conspiracy theory/whatever, they just found a way to make AAA bonds out of junk. It was a simple arithmetics too. Everybody knew the arithmetics and was doing it.

Now is the same - they talked about that expected float/valuation squeeze even on NPR - this is where i heard it, i'm not that into finance markets to come up with it myself :)

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

#847

Post by happosai »

polski-g wrote: post #649
happosai wrote: post #592

Earlier quoted context omitted.

a) Meteorites don't have any of toxic chemicals used to build a server with lithium-ion batteries and solar panels b) we could use the same argument to defend dumping spent nuclear fuel to oceans (like we used to do) c) I agree with the CO2 issue, grok/spacex/xAI and others should be banned from building gas powered datacenters.

You think that meteors don't have lithium? The third most common atom in the universe?

You think the toxity and dangers of materials are defined by the atoms the materials are made of rather than the molecules? Swimming in a ocean of Hydrogen-Oxygen salted by Sodium Chloride must feel dangerous..

Also the toxic fumes from burning batteries don't really come from the lithium but everything else the batteries are made of.

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

#848

Post by matwood »

l23k4 wrote: post #832
worik wrote: post #686

Earlier quoted context omitted.

> It will absolutely be untenable to keep Anthropic , OpenAI and SpaceX off the S&P 500 with them also being the highest valued companies on the market. Following the rules of passive indexes is the whole point. Mēh! The passive indexes (biased to a momentum strategy, so not really passive - they are too big) may have had their day. The blatantly corrupt move to change the rules was clearly an attempt to game them, a…

>Following the rules of passive indexes is the whole point. The whole point of these indices is to represent the market, the rules are unsustainable if they cause too big of a divergence from that goal. > The blatantly corrupt move to change the rules Why do you think nobody in the financial press is reporting on this blatant corruption? Is it because this conspiracy also includes all of the news media?

There’s too much anti AI/Elon emotion to have discussions around this issue at this point. HN is usually pretty good about rational discussions, but AI has really triggered people on both sides.

For example, yesterday I posted a link to the Nasdaq faq about the change, and my comment was flagged hah!

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

#849

Post by fc417fc802 »

Slothrop99 wrote: post #845
fc417fc802 wrote: post #737

Earlier quoted context omitted.

> Comcast is one of the best-run ISPs You mean the company with such a bad reputation that it had to aggressively rebrand? I take it you've never had the displeasure of doing business with them. That said it wouldn't surprise me in the slightest to learn that it was one of the most profitable ISPs for investors. That would fit quite well with the general theme of prioritizing the interests of investors over all else.

> aggressively rebrand That had to be 20 years ago? Not that anyone likes the cable company. As a comcast customer, their core internet service seems really solid. It comes in through some sketchy 1980s cables installed by some company who got bought by some company who got bought by Comcast. So occasionally a router in the back of a gas station blows up, the cable system wasn't exactly built to AT&T standards.

> their core internet service seems really solid

If you ignore data caps the core service itself does seem to be much better these days than it was 10 let alone 25 years ago. But then again my sample set consists exclusively of locations where they have one or two FttH offerings as competition so it's not as though they could have remained in such markets without upgrading.

Somewhat tangentially I find it surprising how fast MoCA is when you consider the cables it runs on top of.

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

#850

Post by jonfromsf »

k2enemy wrote: post #723
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…

> Bonds are no longer recommended. Current research indicates 100% equities to be the best composition leading up to, and past, retirement. Are you referring to Anarkulova et al? Might be worth mentioning that the fixed income part is replaced with international equity, not more domestic equity.

Stocks for the Long Run makes the pretty compelling case that over longer holding periods stocks are less risky than bonds.
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