

They have big plans to build more data centers for themselves, so they definitely want more compute than the have access to right now. But even if they’re paying more to rent xai compute, they’re still paying less overall for hardware/access than their direct AI competition.







That’s definitely costing them more than running it on their own hardware, but it doesn’t mean AI is costing them more than the AI startups. Anthropic for example is already paying SpaceX 1.25 Billion a month for compute, and has agreed to pay Google 200Billion oflcer the next 5 years for access to Google’s compute and TPU chips.
Google’s deal with xAI specifically lets them terminate the deal with 90 days notice after the end of the year. Google is also investing heavily in building new data centers with their hardware. I’m assuming this deal means they’ve eclipsed their current TPU capacity, and are just looking for a short term bandaid until they can catch up with their new constructions.