Under pressure from analysts to justify its eye-popping valuation, SpaceX is diversifying beyond rockets and satellites into a seemingly innocuous but lucrative business opportunity: renting out unused computing power from its Colossus data center complex.
In May, SpaceX agreed to give Anthropic access to about 325,000 Nvidia GPUs across its Colossus data center for $1.25 billion per month. A few weeks later, the company made a similar deal to provide Google with about 110,000 GPUs for $920 million per month. Together, the two deals could generate about $26 billion a year for the company, more than SpaceX’s entire revenue last year.
Mr. Musk’s ambitious plans to build an orbital data center and establish a Mars colony are likely years away, but these deals may help explain how SpaceX can justify its $1.8 trillion valuation after last month’s record IPO.
By renting out unused computing, SpaceX can generate immediate revenue from the infrastructure it has already built, while giving investors new reason to view the company as more than a rocket maker, as Musk has repeatedly positioned it to do, said Sean Clay, senior analyst for telecommunications, media and technology at Moody’s.
This business model works because demand for AI computing continues to outstrip supply as AI competition intensifies and companies build increasingly powerful models. On the other hand, building a large data center can require years of development and significant investment.
That makes SpaceX’s product attractive in the moment and allows it to charge a premium to customers who need that computing power right away, Clay said. luck.
For now, most of SpaceX’s funding still comes from Starlink and its traditional launch business. The company generated $18.7 billion in revenue last year, including $11.4 billion from connectivity services and about $4.1 billion from launches and other space-related activities.
The company’s AI division contributed an additional $3.2 billion, but also posted an operating loss of about $6.4 billion, even though Musk had touted AI as the company’s next cash cow after acquiring xAI in February.
One reason for this may be that the company’s large-scale language model, Grok, requires significant investments in GPUs, power, and other infrastructure to train and operate. At the same time, Grok has so far lagged behind models created by Anthropic and OpenAI in terms of revenue and functionality.
But even if Grok isn’t able to catch up to competitors anytime soon, the computing rental business shows investors that the company has a proven path to profitability thanks to its AI division, Clay said.
“This shows that there are different paths to generating revenue in the AI sector,” he said. “Strictly speaking, it doesn’t have to come from Grok and its AI enterprise applications.”
Even better, the company also has flexibility in what it does with its hardware. SpaceX can rent capacity to external customers, but it can also use it to train new versions of Grok or redirect it to Starlink’s own internal use.
potential pitfalls
Sridhar Tayur, an operations management professor at Carnegie Mellon University, warns that this warning can be both a blessing and a curse. Google’s contract with Anthropic includes a 90-day cancellation clause that allows SpaceX to repurpose the compute if Grok’s needs suddenly increase.
However, the same clause could also cause customers to exit if cheaper computing power becomes available, increasing the risk that any revenue from this business will be temporary.
“Is that a one-off thing that’s not part of your day job?” he asked. “Or will infrastructure-as-a-service become a permanent part?”
SpaceX’s competitors may already be aware of the potential benefits of computing rentals.
According to Reuters, Meta is in talks to lease its computing power to Anthropic in a deal that could be worth up to $10 billion over two years. Meta is also in talks with Anthropic to lease its computing power, sources said. new york times.
Still, the outlook for SpaceX seems bright for now. of wall street journal The company is in talks to provide the Pentagon with potentially billions of dollars worth of data center capacity to run its AI models, according to a report on Friday.
The deal isn’t final, but if it goes through, it would strengthen the case that selling computing can become a long-term business rather than a one-off.
justify that assessment
Musk’s foresight allowed SpaceX to sell its computing in the first place. Back in 2024, xAI brought its first major Colossus cluster online in just 122 days by converting an existing factory. Since then, the company has expanded its Memphis-area complex to include Colossus and Colossus II, which together offer about 2 million square feet of computing power and eventually plan to include 1 million GPUs.
SpaceX’s valuation depends on significant future growth. And critics argue that its market value relies heavily on long-term bets that, if successful, would require huge investments before generating meaningful returns.
Meanwhile, the deals with Anthropic and Google show that SpaceX can generate billions of dollars from the infrastructure it already owns while working towards these long-term goals.
How long this business can last depends on whether the lack of AI infrastructure continues. OpenAI is working with partners through the Stargate initiative announced last year to build a large network of data centers across the United States to support AI development.
But for now, SpaceX has something that almost every major AI developer wants and can’t easily build fast enough.
“It’s going to be a race for computing power, so there’s probably going to be other third parties interested in that computing,” Clay said.
