Google has reportedly signed a massive deal with SpaceX, agreeing to pay $920 million per month for access to artificial intelligence computing power, according to official documents filed by SpaceX with financial regulators.
Under the contract, Google will gain access to 110,000 Nvidia graphics processing units (GPUs) and other technical infrastructure housed in SpaceX data centers. The agreement is set to take effect in October 2024 and will run through June 2029.
The deal comes ahead of SpaceX's anticipated initial public offering (IPO), which could value Elon Musk's company at over $1.75 trillion. The contract is seen as a move to demonstrate the profitability of SpaceX's massive data center investments to potential investors.
CNBC reported, citing a Google Cloud representative, that the AI capacity is needed due to high customer demand for the Gemini Enterprise platform. Under the terms, if SpaceX fails to deliver the required processors by September 30, 2026, Google can immediately terminate the contract. Starting next year, either company can end the partnership with 90 days' notice.
This is SpaceX's second major AI-related agreement, following a February deal with Musk's own AI company, xAI. Earlier, startup Anthropic leased all capacity at another SpaceX data center in Tennessee. Analysts suggest Musk is using such contracts to show investors that his heavy spending on data centers is generating returns ahead of the IPO.
Despite the deal, SpaceX's AI division is reportedly struggling. In the first quarter, the company spent over $7.7 billion on AI development but posted a loss of $2.5 billion on revenue of just $818 million. Musk's Grok chatbot has failed to compete with market leaders, and the company has faced scandals and lawsuits over users generating pornographic images.
Due to these challenges and key staff departures, SpaceX is now forced to rent out its data center capacity to other tech giants, effectively competing with specialized cloud providers. Notably, in its IPO filings, SpaceX lists Google as a direct competitor in both AI and internet services, where Starlink satellite system competes with Google Fiber.
Meanwhile, Google is also ramping up AI spending, with costs expected to reach $180-190 billion this year. Five years ago, the two companies had a similar contract but with reversed roles: Google then leased its capacity to SpaceX for Starlink development.
Source: podrobno.uz