Weren't we just talking about how SpaceX is valued based on some profits from starlink + tons of speculation?

Yet when we learn of this new $26B in yearly revenue (2.2B/month from Google and Anthropic)the conversation does not return to that discussion. It transforms into:

"xAI's tech sucks"

"Google/SpaceX is Structurally Bad for the Economy"

etc

This is called motivated reasoning. We get new information and instead of the obvious thing, updating prior conclusions, we just find a different way to react negatively. The negative reaction will be achieved. The narrative here is completely polluted by people who dislike Elon/SpaceX.

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pseudosavant an hour ago | parent | next [-]

I think the point is, that although at least xAI is monetizing their GPUs/datacenters, they are doing so at a REIT/rental multiplier instead of a frontier lab multiplier.

Clearly, xAI thinks this is the best way for them to extract value out of their assets.

Also, it is clear that Google and Anthropic both think they can extract more value out of those assets than they will pay in rent to SpaceX.

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chris_money202 5 hours ago | parent | prev | next [-]

Think two things can be true at once. They should be using their capital to achieve their speculative price. Instead, they are using their capital to achieve a modest ROI, thus invalidating the speculation AND proving they have tech issues in what the speculation is around.

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wmf 2 hours ago | parent | next [-]

Elon says Grok models are being trained right now. (Unless I missed an update.) For whatever reason these training runs are not using xAI's full GPU capacity. Short of a miracle or time machine it sounds like there is nothing more they can do to advance their mission.

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bpodgursky 4 hours ago | parent | prev [-]

They are making $24B/yr on datacenters they built in < 2 years for $2-3B. To call that a "modest ROI" is... quite a statement.

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qaq 3 hours ago | parent | next [-]

Where did you get 2-3B from? Colosus 2 GPU's alone were 18B Total cost including construction, power and water treatment facility might be close to 25-30B.

	▲	guywithahat 2 minutes ago \| parent [-]
		I'm not OP but that was the cost of the initial facility if I remember correctly when it was first up and running, what you're describing I believe is the full cost after all expansions/etc

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chris_money202 3 hours ago | parent | prev | next [-]

Operating these datacenters is a pretty big cost that isn't factored here

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4 hours ago | parent | prev | next [-]

[deleted]

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adammarples an hour ago | parent | prev | next [-]

It's right in the article, there were 40bn of disclosed costs. It's still a good return, it pays for itself in 18 months, but if you build and rent data centres, then that's your business, and you're not likely to 100x in 3 years, which is the wild projection behind their valuation.

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throwaway5752 4 hours ago | parent | prev [-]

There is a shortage, they are short lived assets. It's a blip and unrelated to their long term profitability and valuation. They can't make a long lived business of building and renting out compute at those margins.

It was definitely a smart business move. It should be troubling to any shareholder than xAI is unable to utilize this infrastructure as renting it out to competitors.

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gunapologist99 3 hours ago | parent [-]

Better not mention your theory to all the other Tier 1 data centers. Or maybe you're saying that it's only AI that's short-lived.

	▲	chris_money202 3 hours ago \| parent \| next [-]
		T1 companies have longer depreciation cycles, they have customers that will use the dated hw for non-frontier work. They can make the capex more justifiable and have flexibility to be more creative about its use. A frontier lab really needs the best hw available at full capacity.
	▲	throwaway5752 2 hours ago \| parent \| prev [-]
		Respectfully, I tend to think of tier 1 data centers as someone I'm paying for colocation services and the value they provide is power infrastructure and redundancy, network infrastructure and redundancy, cooling, and physical security. The shortage I referred to is in GPUs, that's what really being rented here. Even if GPUs lasted forever, they're are a depreciating asset because they become obsolete with improvements over generations. GPUs do not last forever, either. I've read here, and heard from others, that they aren't even living up to their 5 year depreciation schedules under production load, closer to 2-3 years. I use AI all the time. I hope AI isn't short lived. It might be if they can't figure this shit out, or if IPOs like spacex poison public opinion against them first.

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emodendroket 2 hours ago | parent | prev | next [-]

Well, perhaps, but those concerns seem different enough that it seems fairly plausible different people have them. It seems hard to argue the basic point that Grok is not as good as its competition if you spend time using both. That may or may not matter from a business perspective.

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jmye 4 hours ago | parent | prev [-]

> he narrative here is completely polluted by people who dislike Elon/SpaceX.

Hard disagree. It's polluted by Elon in general (pro and con), just like Tesla's idiotic valuation.

But in this case, a pivoted business model fundamentally changes the value proposition, and I'm not clear why "this space company making money on space things is now pretending to be a compute reseller and that's a good thing" is the narrative you think is preferable.

It's also beyond lame to essentially subtweet a "narrative" instead of responding to it directly. Who is "we", aside from a transparently dishonest way to pretend consensus exists?