Google to pay SpaceX $920 million a month for compute capacity at xAI data centers
Google has entered into a significant agreement with SpaceX, committing to pay $920 million a month for compute capacity at xAI data centers. This deal comes as SpaceX prepares for a public offering, aiming for a valuation exceeding $1.75 trillion. Despite substantial investments in AI, SpaceX's AI segment has faced challenges, including operating losses and legal issues related to its Grok model.
- ▪Alphabet's investment in SpaceX has grown significantly since 2015, when the company was valued at $12 billion.
- ▪SpaceX reported $10.1 billion in capital expenditures in the first quarter, with $7.7 billion allocated to AI initiatives.
- ▪The AI segment of SpaceX recorded an operating loss of $2.5 billion on $818 million in revenue during the same quarter.
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Alphabet has made a windfall from backing SpaceX. Musk's company was worth $12 billion at the time of Google's 2015 investment, and is aiming to go public next week at a valuation of over $1.75 trillion. Musk is trying to boost SpaceX's AI story ahead of next week's offering to show that the company is getting at least some return on its hefty investment in multiple data centers in and around Memphis. SpaceX said in its prospectus that capital expenditures in the first quarter totaled $10.1 billion, more than doubling from a year earlier, with the vast majority of those costs — $7.7 billion — committed to AI. Meanwhile, the AI segment of the business recorded an operating loss in the quarter of $2.5 billion on just $818 million in revenue.
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