xAI is looking more like a datacentre REIT than a frontier lab
7 hours ago
- #datacentre
- #xAI
- #compute shortage
- xAI, now part of SpaceX, has formed partnerships with Anthropic and Google, providing them with significant compute capacity.
- Anthropic faced severe capacity issues, leading to peak-hour restrictions on subscriptions, which were reversed after partnering with xAI for access to the Colossus 1 datacentre.
- The deals are highly lucrative: Anthropic pays $1.25bn/month for 300MW capacity, and Google pays $920mn/month for 110k GPUs, with cancellation clauses after an initial lock-in period.
- xAI has a competitive advantage in datacentre buildout, exemplified by constructing Colossus 1 in 122 days, compared to slower projects by hyperscalers.
- The partnerships may involve financial engineering to boost SpaceX's IPO valuation and pressure OpenAI, but they also address a real compute shortage in the industry.
- Grok's position is uncertain as datacentre capacity intended for its training is leased to competitors, suggesting xAI may prioritize datacentre monetization over frontier AI lab ambitions.
- Operating costs, such as power, are minimal relative to revenue, making these deals extremely profitable for xAI.