> Reasonable or unreasonable?

Reasonable. The influencers who just learned the term circular financing are mostly idiots. The ones pointing out the conflict of interest with Google are technically correct, but the conspiracy takes so many moving parts to yield such little gain that it would have to be particularly stupid in vision yet competent in execution to pull off.

But asking if there is a quid pro quo between Anthropic and SpaceX? Like, there could be. We have no evidence of it. The S-1 mention doesn't make any sense. But they're both going public and if I were a journalist I'd look into it.

The base case, that there is commercial value to xAI's datacenters that folks in the frontier-model space are competing to get access to, does seem to be one folks here are actively rejecting.

You're not wrong in the long term, either in general or for SpaceX.

In the long term, hopefully the market stabilizes, new entrants can challenge Nvidia etc. But of course maybe not!

However for SpaceX, this is a dead end move. They made a good decision on buying this compute when they did but they failed to use it to create a compelling model.

So they're selling access to recoup some of their investment (maybe a profit?). But what's the plan as these chips age out over the next three to five years? Become a compute company? They claim they want to... in space!

Regardless, they bought some valuable chips, failed to use them, but can now sell access and recoup over the next few years before they become outdated.

It's like buying a ticket for a concert, realizing you can't go and that you can resell it for more than what you paid.

You're right that long term it should stabilize into a low margin business.

Elon is also much less risk averse than others, which helps to build stuff fast, possibly cheaper, pushing legality to the limit. Colossus was definitely built much faster than anything else. I think building datacenters suits him better than a pure software play, where "move fast break things" is already the norm.

> because all the inputs are commodities

AI compute hardware is not a commodity. And in a shortage, commodities can command high margins.

xAI has lots of NVIDIA GPUs and HBM. It also has permits and power hook-ups, both things that are getting harder to come by day by day in the U.S. Natural gas is a commodity. Doesn't make having lots of right now bad business.

> the whole game is hoping that they hope to charge more now because people can't build fast enough and try to recoup their upfront costs before either a) other capacity comes online and b) the installed hardware becomes obsolete

Correct. But charging people now generates incumbency advantages that make beating (a) and (b) easier. (From what I can tell, (b) isn't an existential issue, at least for xAI, because they've basically already recouped their investment with commited contracts they'd have to fuck up on to lose.)

I wonder if they do have non-commodity AI capabilities, just, ones that don’t translate into a world-class frontier model.

Like they might have hired really good AI infra folks, gotten really good uptimes on their nodes, gotten folks who really know how to configure Infiniband (or whatever). But then, didn’t find the folks who knew what to run on that infrastructure. Or maybe Grok just had too much political drama around it.

> it depends on how you view the payout google will get when these companies IPO and give Google exist liquidity and a nicer looking balance sheet

Google has a fantastic balance sheet with or without these investments. None of the recent deals have uniquely enabled an IPO. So they'd be playing to increase their stakes' value by a few points ahead of a dump, a dump that would almost certainly wipe out much more than they'd stand to gain by trying to make someone else a dollar so they get nickels and dimes out of it.

> it is hiding the fact that there's very little external revenue coming into the AI sector compared to the costs

There is a lot of revenue dumping into this sector. If there weren’t, you’d have a point about manufactured numbers. But I don’t think anyone seriously doubts Anthropic and Google are hauling in serious dough.

The question, as you point out, is how much they are keeping. But xAI selling compute doesn’t really hide any of that. If anything, given the prices Musk is getting, it adds to the cost line. (And xAI isn’t masking compute revenue as Grok’s.)