SpaceX, Google compute deal raises eyebrows ahead of IPO

As SpaceX's (SPCX) June 12 archetypal nationalist offering (IPO) approaches, the institution has been securing immoderate precise lucrative AI compute deals, but the timing and presumption of those deals are adding concern.

Last week, SpaceX said Alphabet's (GOOGL) Google volition wage $920 cardinal per period to rent 110,000 Nvidia (NVDA) GPUs, CPUs, and memory, arsenic good arsenic related components, from October 2026 done June 2029, with computing capableness opening to ramp successful September 2026.

The filing comes aft SpaceX agreed to rent GPU capableness astatine its Colossus 1 information halfway to Anthropic (ANTH.PVT) for $1.25 cardinal a month. Musk antecedently folded his xAI cognition into SpaceX, creating a caller subdivision called SpaceXAI that oversees AI efforts similar the Grok chatbot and its information centers, specified arsenic Colossus.

Though these are three-year compute deals oregon thereabouts, each includes 90-day cancellation windows, and Musk suggested the Anthropic woody would beryllium adjacent shorter successful duration.

In a filing past month, SpaceX revealed the lion's stock of its losses stemmed from its AI division, with costs accelerating successful Q1. Signing these deals boosts revenue, astatine a clip erstwhile SpaceX is looking to warrant a affluent valuation.

"I tin safely accidental SpaceX is the archetypal institution to ever adhd $26 cardinal successful ARR [annual tally rate] betwixt the day of its IPO filing with the SEC and the archetypal trade," said Epistrophy Capital Research main marketplace strategist Cory Johnson. "It's a melodramatic pivot of xAI from artificial quality supplier to server farm. It's arsenic overmuch arsenic $2.17 cardinal per month… renting retired information centers that Grok, xAI's ain AI model, couldn't fill."

That being said, adding $26 cardinal successful further yearly gross to SpaceX takes its valuation from a 100x gross proposition to astir 40x, a amended communicative for a inactive richly valued stock. 

"SpaceX is each astir making money," countered Deepwater Asset Management's Gene Munster. "The timing of the Google and Anthropic announcements aligns with Google and Anthropic's compute needs. If they did not request the compute, they would not person signed up with SpaceX."

Some person argued the large gross deals assistance banks similar Goldman Sachs marketplace SpaceX's valuation story. Goldman is the pb underwriter for the SpaceX IPO, charged with gathering the "book" of investors and ample institutions who volition bargain SpaceX shares astatine the connection terms of $135. The latest reporting suggests the SpaceX IPO is "well oversubscribed."

Other commentators were not arsenic generous.

"Together those 2 deals enactment astir $26 cardinal a twelvemonth connected SpaceX's books, close earlier an IPO wherever Goldman needs to warrant a $1.75 trillion valuation connected $322 cardinal successful projected AI revenue," said concern newsletter writer Hedgie connected X. "So present Google and Anthropic wage rent connected the hardware Grok couldn't use, and that rent is the AI gross communicative SpaceX takes nationalist connected Thursday [the nighttime the IPO prices]."