Under pressure by analysts to justify its eye-popping valuation, SpaceX is diversifying beyond rockets and satellites to a seemingly innocuous but lucrative business opportunity: renting out the unused computing capacity from its Colossus data center complex. <\/p>\n
In May, SpaceX agreed to give Anthropic access to roughly 325,000 Nvidia<\/a> GPUs across its Colossus data centers for $1.25 billion per month. Weeks later, it struck a similar agreement to provide Google with about 110,000 GPUs for $920 million per month. Together, the two contracts could generate about $26 billion for the company annually\u2014more than SpaceX’s entire revenue last year. <\/p>\n With Musk’s ambitious plans for building orbital data centers and establishing a Mars colony likely years away, these deals may help explain how SpaceX can justify a $1.8 trillion valuation after its record-breaking IPO last month. <\/p>\n Renting its unused compute gives SpaceX immediate revenue from infrastructure it has already built, while giving investors another reason to view the company as more than a rocket manufacturer, as Musk has repeatedly positioned it, according to Sean Cray, a senior analyst covering telecom, media and technology at Moody’s. <\/p>\n The business model works because demand for AI compute continues to outpace supply as the AI race heats up and companies build increasingly powerful models. Meanwhile, building a large data center can require years of development and a large investment. <\/p>\n This makes SpaceX’s offering attractive right now, and allows it to charge a premium to customers that need that computing power immediately, Cray told Fortune. <\/p>\n For now, most of SpaceX’s money 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 work.\u00a0 <\/p>\n Its AI segment contributed another $3.2 billion, but it also recorded an operating loss of roughly $6.4 billion\u2014even as Musk has touted AI as the company’s next money-maker after it acquired xAI in February. <\/p>\n Part of the reason may be that Grok, the company’s large language model, requires massive investment in GPUs, electricity, and other infrastructure to train and operate it. At the same time, Grok has so far lagged behind models created by Anthropic and OpenAI in terms of revenue and capabilities.\u00a0 <\/p>\n Yet, even if Grok doesn’t manage to catch up to its competitors anytime soon, the compute renting business shows investors the company has a proven path to profitability thanks to its AI segment, said Cray. <\/p>\n Story Continues <\/p>\n “It shows that there’s just different pathways for them to generate revenue in their AI segment,” he said. “It doesn’t strictly have to come from Grok and their AI enterprise applications.” <\/p>\n Better yet, the company also has flexibility over what it does with the hardware. SpaceX can rent capacity to outside customers, but it can also use it to train newer versions of Grok, or redirect it to Starlink’s own internal uses. <\/p>\n A potential pitfall <\/p>\n This caveat could be a blessing and a curse, warned Sridhar Tayur, a professor of operations management at Carnegie Mellon University. Built into the contracts with Google and Anthropic is a 90-day cancellation provision that gives SpaceX the ability to reclaim its compute if Grok’s needs suddenly increase. <\/p>\n But the same clause could also allow its customers to walk away if cheaper compute capacity becomes available, raising the risk that the revenue from this business could be temporary. <\/p>\n “Is it a one-off thing that is not your main line of business?” he asked. “Or is infrastructure as a service going to become a permanent part?” <\/p>\n SpaceX’s competitors may have already taken note of the potential gains that come with renting compute. <\/p>\n Meta<\/a> is reportedly in talks to lease its computing power to Anthropic in a deal that could be worth up to $10 billion over two years, Reuters reported<\/a>. Meta is also in talks with Anthropic to lease its computing power, sources told the <\/a>New York Times<\/a>. <\/p>\n