SpaceX has entered into a significant agreement with Google, under which Google will pay $920 million per month for compute capacity at xAI data centers operated by SpaceX. The deal spans 32 months, beginning at a reduced fee as capacity ramps up through September, and then at the full rate from October 2026 through June 2029. This arrangement will see Google utilizing approximately 110,000 Nvidia graphics processing units, along with central processors, memory, and other components housed in SpaceX's data centers, as detailed in a regulatory filing on Friday [1].
The agreement includes provisions allowing Google to terminate the contract if SpaceX fails to deliver the committed GPU capacity by September 30, 2026, or to accept a reduced fee after a one-month grace period. After 2026, either party can terminate the agreement with 90 days' notice. This deal follows a similar arrangement SpaceX announced with Anthropic in May, and comes shortly after SpaceX's merger with xAI, Elon Musk's artificial intelligence company, which valued the combined entity at $1.25 trillion [1].
SpaceX is preparing for an initial public offering (IPO) expected to raise record sums, targeting a valuation of over $1.75 trillion. The company has significantly increased its capital expenditures, with $10.1 billion spent in the first quarter, more than doubling from the previous year, and $7.7 billion of that dedicated to AI infrastructure. Despite these investments, the AI segment reported an operating loss of $2.5 billion on $818 million in revenue for the quarter [1].
Musk is positioning SpaceX's AI capabilities as a key growth driver ahead of the IPO, highlighting the company's ability to monetize its substantial investment in data center infrastructure. SpaceX stated in its IPO prospectus that its compute infrastructure strategy provides flexibility in allocating and monetizing capacity, and named Google as both a customer and a competitor [1].
CONCLUSION
The $29.4 billion compute capacity deal with Google marks a major milestone for SpaceX as it prepares for its IPO, providing a substantial revenue stream and validating its AI infrastructure investments. However, the AI segment remains unprofitable, and the company faces execution risks in delivering on its commitments. The agreement underscores SpaceX's growing role in the AI compute market and its strategic positioning ahead of its public offering.