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
