xAI is looking more like a datacentre REIT than a frontier lab
2 days ago
- xAI formed partnerships with Anthropic and Google, providing them with significant datacenter capacity, with Anthropic paying up to $1.25 billion/month for 300MW and Google $920 million/month for 110k GPUs.
- Anthropic faced severe compute shortages, leading to peak-hour subscription restrictions, which were alleviated by xAI's Colossus 1 datacenter in Memphis.
- The deals are highly profitable for xAI, recouping capex within 18 months, though they include cancellation clauses and potential conflicts of interest involving Elon Musk, Google, and OpenAI.
- SpaceX/xAI has a competitive advantage in building datacenters quickly (e.g., Colossus 1 in 122 days), unlike hyperscalers facing delays due to geopolitical issues and slow project execution.
- The partnerships raise questions about Grok's future as a frontier model, as capacity is leased to competitors, but xAI may be monetizing spare capacity while capitalizing on compute shortages and financial engineering ahead of SpaceX's IPO.