Google commits $11B/year to SpaceX for compute at xAI data centers, potentially adding $1T to SpaceX's valuation.
Google will pay SpaceX $920 million per month for compute capacity at xAI data centers. The deal, worth $11 billion annually, could boost SpaceX's valuation by $1 trillion.
Key facts
- Google pays SpaceX $920 million per month for compute.
- Deal worth $11 billion annually.
- Google owns ~5% of SpaceX after dilution.
- SpaceX valued at 94x revenue.
- Deal could add $1 trillion to SpaceX valuation.
Google will pay SpaceX $920 million per month for compute capacity at xAI data centers, according to CNBC. The deal increases SpaceX's revenue by $11 billion per year. Hacker News commenters noted that Google purchased 10% of SpaceX over a decade ago; after dilution, Google probably owns around 5% of the company. SpaceX is valued at a whopping 94x revenue, meaning this single deal could boost its valuation by $1 trillion.
This is a masterful piece of financial engineering by Google and SpaceX. Google gets guaranteed compute capacity for its AI workloads, likely including training and inference for Gemini models, while SpaceX gains a massive, predictable revenue stream. The arrangement also ties xAI's data center capacity to Google's cloud ambitions, creating a circular supply chain: Google funds SpaceX, SpaceX builds xAI's infrastructure, and xAI hosts Google's compute.
Implications for the AI Infrastructure Market
The deal underscores the insatiable demand for compute capacity among hyperscalers. Google's $11 billion annual commitment rivals what it spends on its own data centers. It also signals a shift: instead of building all capacity internally, Google is renting from a competitor's subsidiary. This could pressure rivals like Microsoft and Amazon to seek similar arrangements with other non-traditional providers.
What the Numbers Mean
At $920 million per month, this is the largest single compute rental deal publicly known. For context, Google's total capital expenditure in 2025 was roughly $50 billion. This deal alone represents 22% of that annual spend. If SpaceX maintains its 94x revenue multiple, the deal adds $1 trillion to its valuation, making a potential IPO at $1.75 trillion more plausible.
What to watch
Watch for SpaceX's confidential IPO filing, expected by mid-2026, which could value the company at $1.75 trillion. Also monitor Google's Q3 earnings call for commentary on whether this deal replaces or supplements its own data center buildout.
Source: cnbc.com
[Updated 07 Jun via the_decoder]
The Decoder reports the deal is based on an SEC filing and grants Google access to approximately 110,000 Nvidia chips to power its Gemini Enterprise platform, underscoring the acute scarcity of AI infrastructure [per The Decoder].
Originally published on gentic.news
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