Google Will Pay SpaceX $920 Million Per Month For Compute 50
Ahead of its upcoming IPO, SpaceX announced that Google will pay the company $920 million per month for access to roughly 110,000 Nvidia GPUs and related compute infrastructure. Google says the agreement is short-term "bridge capacity" to meet stronger-than-expected demand for Gemini Enterprise, while SpaceX is using deals like this and its Anthropic contract to bolster its pitch for a historic public offering. TechCrunch reports: The deal is similar in length and scope to the one SpaceX announced with Anthropic in late May. As part of that deal, Anthropic agreed to pay SpaceX $1.25 billion per month through 2029 to rent all the available compute from its Colossus 1 data center near Memphis, Tennessee that xAI -- now part of SpaceX -- originally built for its own artificial intelligence efforts.
Google's deal appears to be paying for roughly half the amount of compute that Anthropic has access to at Colossus 1. SpaceX didn't say which specific data center Google would be using. CEO Elon Musk has previously suggested his company would reserve the Colossus 2 data center for xAI. Anthropic was significantly limited in its compute capacity prior to its deal with SpaceX, raising usage limits on the same day the deal was announced. Google is in a very different position, with some estimates naming it as the world's largest single owner of AI compute.
[...] Also like the Anthropic deal, the agreement with Google includes a cancellation clause. Both SpaceX and Google have the option to terminate the agreement with 90 days notice after December 31, 2026. Google's access to the data center will ramp up "through September at a reduced fee," according to the filing. "If we fail to deliver access to the committed amount of GPUs by September 30, 2026, then following a one-month grace period, Google may immediately terminate the agreement or accept the number of GPUs provided" with a reduction in the monthly fees, it reads.
Google's deal appears to be paying for roughly half the amount of compute that Anthropic has access to at Colossus 1. SpaceX didn't say which specific data center Google would be using. CEO Elon Musk has previously suggested his company would reserve the Colossus 2 data center for xAI. Anthropic was significantly limited in its compute capacity prior to its deal with SpaceX, raising usage limits on the same day the deal was announced. Google is in a very different position, with some estimates naming it as the world's largest single owner of AI compute.
[...] Also like the Anthropic deal, the agreement with Google includes a cancellation clause. Both SpaceX and Google have the option to terminate the agreement with 90 days notice after December 31, 2026. Google's access to the data center will ramp up "through September at a reduced fee," according to the filing. "If we fail to deliver access to the committed amount of GPUs by September 30, 2026, then following a one-month grace period, Google may immediately terminate the agreement or accept the number of GPUs provided" with a reduction in the monthly fees, it reads.
What I'm reading (Score:5, Insightful)
Sounds like Musk bought a shitload of GPUs that he doesn't need, because nobody is using Grok besides idiots on Twitter to make "sick memes."
If they have all those GPUs energized and can afford to lease them to their competition, that just tells us nobody is using them.
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I'm guessing Musk had SpaceX acquire xAI and then the people that actually know about business at SpaceX said "This Grok product is a big money pit, but there's a shortage of hardware that Google and Anthropic will pay loads to use"
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[...] the people that actually know about business at SpaceX said "This Grok product is a big money pit, but there's a shortage of hardware that Google and Anthropic will pay loads to use"
Only temporarily, I suspect. Google and Anthropic are perfectly able to build their own compute-centers, and I suspect would rather do that than feed their competition. Once the hardware is available, of course.
Companies do help their competitors out from time to time when production-loads become unbalanced. (Pepsi has canned Coke and vice-versa, for example.) But, as I said, only temporarily.
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(Pepsi has canned Coke and vice-versa, for example.)
Hold on, I might be wrong about that. I remember hearing a news story about that several decades ago, but can't confirm it now.
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Good stuff with the self correction. I wish people did this more often when they catch themselves out with a confabulation (which everyone does from time to time. Memory is an imperfect mechanism).
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Re: What I'm reading (Score:3)
Why spend hundred of millions a month on something that has no revenue and you think is "dying" ?
No, I believe that Google and others are convinced that AI is the next big thing. They likely believe AI is as important as smartphones and the Internet if their spending is any guide. It is a crazy bet in my opinion and SpaceX/xAI will probably come out of this better than Anthropic.
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Better tell that to Anthropic's annualized revenue growth.
Dec 2022: $10M
Dec 2023: $100M (10x in 12 months)
Jan 2025: $1B (10x in 13 months)
May 2025: $3B
Oct 2025: $7B
Dec 2025: $9B
Feb 2026: $14B
Mar 2026: $19B
Apr 2026: $30B
May 2026: $47B
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Why did you not list their lack of profits? Nobody cares about revenue growth, it looks impressive but is made up nonsense full of circle jerk deals among AI companies. Investors care about ROI and don't like capex unless there's a big payday coming very soon.
Here's a better number: Anthropic announced their first ever operating profit just ten days ago for Q2. Very suspicious timing given the IPO. And interestingly the profit claim happens to coincide with a compute discount for said Q2 from Elon. No dis
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1) You said "AI hype is dying", not "AI companies aren't profitable" Undergoing an insane sustained ~10x/yr exponential growth trajectory over 3 1/2 years , and that rate even accelerating now, is in no way "dying"
2) It is absolutely not normal for companies undergoing rapid rates of growth, let alone such an insane rate, to be profitable. Scaleup generally means you lose money hand-over-fist, as scaleup is extremely expensive (no less so in this field!). And yet:
3) Anthropic may actually pull it off thi [techcrunch.com]
Re: What I'm reading (Score:2)
Only temporarily, I suspect. Google and Anthropic are perfectly able to build their own compute-centers, and I suspect would rather do that than feed their competition. Once the hardware is available, of course.
That's the problem: It isn't. It's one thing to pay an arm and a leg for CPU, GPU, Memory, SSD, etc. But high performance tensor units? Doesn't really matter how much you're willing to pay, you're not getting them for at least a few years. You've probably heard of China being allowed to buy from Nvidia recently, but the only TPUs they're allowed to buy are the ones nobody really wants.
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Here's the crazy thing: initially, SpaceX / X.AI didn't acquire the servers. Tesla had the contract for them, and then Tesla just gave those rights to X.AI. Tesla is a public company, while X.AI was Musk's private company, founded so that he wouldn't have to share any AI profits with Tesla.
Now, Musk's excuse was that Tesla's datacentre wasn't ready yet, and it cost Tesla nothing. But of course, there was a massive backlog on servers; the rights to early delivery of servers was incredible value. It let X.
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It also tells us he's making $1B / month, but let's gloss over that part, lol. Haters gonna hate.
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People don't pay capital depreciation. It's a bookkeeping technique to reflect that durable capital assets don't last forever. People pay for the assets up front. Capital depreciation decreases the book (=accounting fiction) value of the asset and spreads the tax deduction for the purchase expense over the same time.
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The purpose of depreciation is to track the actual value of the asset. The value of that GPU you bought in 2020, or your car, actually did decrease over time by any way you care to measure it.
You can try and play around with the depreciation rate for creative accounting purposes but governments tend to dictate one for taxes and you generally have to tell investors how you calculated your non-tax one. The bill also comes due whenever you eventually dispose of the asset.
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As he already said, haters gonna hate.
Despite being variously a know-nothing alt-right trans-denying fascist stupid head, he's worth a $trillion and running several successful businesses that individually would be massive, groundbreaking success stories.
That's gotta just burn, doesn't it?
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For what investment in GPUs?
Typically when rent seeking, the rent is a fraction of the cost of the asset. Some assets appreciate like houses, some depreciate like GPUs.
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Meanwhile SpaceX's entire business model is based on creating a super duper ultra AI that dominates everyone's AIs.
I am guessing the point you are getting at is that being a cloud p
Re: What I'm reading (Score:2)
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In 2004, $500 million in GPU orders were transferred from Tesla to X. This year, SpaceX acquired X. Now they're being hired out.
The only AI that wasn't racist enough is also the only AI that has more GPUs than it can use.
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Kinda a massive difference between GPUs (video) and NPUs (no video).
Must be nice to have that kinda scratch to throw around.
"Hey Google, y'know, you could hook your users up! We know where to get the good stuff!!"
If an outfit is blowing fat stacks of cash like that, couldn't they... I dunno... buy some NPUs and slap together a DC o r two?
Well.. Okay then... (Score:3)
Not sure that giving money to a third party to make your core product experience worse is the best of ideas. Google has the cash to see how it turns out, no question about it.
I am also very skeptical that there is any path to make the costs for LLM-based search the same as traditional search. I don't think Google can charge much more for advertising services either.
Of course, my bias is that people want predictable results when interacting with a search engine. Maybe I am wrong about that.
Re:Well.. Okay then... (Score:4, Insightful)
Google is not comparing the costs or usability of chatbots versus traditional search. They are comparing someone else getting chatbots to replace a significant amount of their search traffic compared to Google doing the same and cannibalizing their own traditional search. It's not a gross margin question for Google but an existential question.
Too lazy to read IPO ... (Score:2)
So Tesla is not a car company, it is an AI company, and Tesla is part of SpaceX, hence the compute contract?
Re: Too lazy to read IPO ... (Score:3)
Tesla is not part of SpaceX, xAI is now part of SpaceX.
It's all explained in that prospectus.
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Viktor the new mongodb footer ad? (Score:2)
I’m getting a harassing advertisement at the bottom of every slash that page for Victor. I’m pro ads to support this site , but this is annoying and harassing.
how does one create an AdGuard rule that will actually work across/thought to kill this ad?
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Lucky you!
I'm told that frisky cougars in neighborhood are wanting me to visit them.
I don't want to leave my basement.
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Zoophiles with a thing for large cats must get so frustrated by such ads.
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Full uBlock Origin on Firefox seems to take care of it. Firefox is now the only browser capable of running uBlock Origin.
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You just need to wait for updates. I got the ads for a couple of days, but now the uBlock Origin blocklists have been updated again to block them.
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I run uBlock Origin on Brave, and it works fine.
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+$8000 per GPU per month. (Score:5, Funny)
That should be enough to cover the electricity bill and get a100% ROI within 6 months.
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In other news, Google is selling $80 billion in new stock to fund AI infrastructure. So, as I said in a post above, I suspect Google is only a temporary customer of SpaceX/xAI.
The fact that Google/Alphabet would risk stock dilution rather than just sell some bonds tells me that it sees a serious upside to the AI game, and needs flexible no-strings cash (i.e., without repayment schedules) to drive it forward. And the fact that it's renting GPU cycles from SpaceX means that it needs this compute-structure rig
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What I'm saying is they're not going to last. Depreciation is a major problem for these AI data centers.
But that assumes any money ever changes hands. Over and over and over again Elon makes deals that have a long list of requirements he can't meet and gets headlines by pretending he can meet all those requirements and that he will get paid the e
I hope Dr. Forbin has stock options (Score:3)
Too soon to welcome our new Colossus [wikipedia.org] overlord?
[Spoiler: It doesn't end well for humanity.]
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That book must have sent waves of panic in the secret parts of the UK government. During WWII, a highly secret site built early computers to break the German Lorentz cipher. The existence of these was kept secret until the mid '70s.
That someone would write a book about a fictional computer called "Colossus" would have lots of people wondering if the name was a coincidence, of if there had been a leak.
Good for Musk; bad for Google (Score:2)
stupid waste of money
the spacex ipo seems massively over valued (Score:3)
i think this is just some headline bait to get retail in so the VCs can dump on them
Don't know why... (Score:3)
...but big companies reselling each other GPU time is recalling what happened [wikipedia.org] years ago with fiber bandwidth. I am stockpiling popcorn to enjoy the forthcoming show....
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Another layer on the pyramid (Score:1)