SpaceX is in talks with the Pentagon to supply data-center capacity for running AI models at a cost of up to several billion dollars, according to a Wall Street Journal report. The negotiations aim to provide the United States Department of Defense with additional cloud-computing resources to support AI applications across the National Security Agency and warfighters. Amazon, Microsoft, Google, and Oracle already provide capacity to the Pentagon, and the potential deal would expand the department's cloud infrastructure for national security AI operations.
SpaceX Negotiates Pentagon AI Computing Deal Worth Billions
The two sides are negotiating an arrangement under which SpaceX would provide computing capacity to the department at a cost of up to several billion dollars, people familiar with the matter told the Wall Street Journal. Talks could collapse with no deal. The potential deal would give the United States Department of Defense more cloud-computing resources to support AI applications across the National Security Agency and warfighters.
SpaceX Plans Cloud Expansion to Compete on Price
SpaceX is planning a major expansion of its cloud-computing efforts, including competing directly with providers like CoreWeave by offering its computing capacity at lower prices, the Wall Street Journal report said. SpaceX acquired Elon Musk's xAI earlier this year and went public in June. The company subsequently integrated Grok AI models and data centers into its business under the segment now called SpaceXAI. The company has rapidly built massive data centers in Memphis and has also touted putting up data centers in space to resolve the ongoing computing shortage.
SpaceX Signs $27-28B in AI Client Deals
SpaceX has already signed cloud-computing deals with Anthropic, Google, and Reflection AI in recent months to rent out data-center capacity for running AI models. Combined, the three deals represent roughly $27-28 billion in annualized revenue at full rates. All contracts include flexibility clauses allowing early termination, reflecting the fast-moving AI sector.
SPCX Stocks Close Down 5.5%, Below IPO Price
SPCX shares closed down 5.5% on Friday, and clocked its sixth consecutive day in the red. SPCX stocks closed at $123.99 on Friday, below its IPO price of $135. On Stocktwits, retail sentiment around SPCX stocks stayed within the 'bearish' territory over the past 24 hours, while message volume was 'low.' A Stocktwits user opined that the potential deal would push the stock above its IPO price yet again. Another user expressed optimism about the Starship test flight slated for Monday after it was scrapped on Thursday. Starship is key to Musk's dream of enabling rocket reusability and the company's aspirations to set up data centers in Space. The rocket, however, is still in its testing phase.
FAQ
What is SpaceX negotiating with the Pentagon?
SpaceX is in talks with the Pentagon to supply data-center capacity for running AI models at a cost of up to several billion dollars, according to a Wall Street Journal report. The negotiations could provide the United States Department of Defense with additional cloud-computing resources to support AI applications across the National Security Agency and warfighters, though talks could collapse with no deal.
How much revenue do SpaceX's existing AI client deals represent?
SpaceX has signed cloud-computing deals with Anthropic, Google, and Reflection AI in recent months to rent out data-center capacity for running AI models. Combined, the three deals represent roughly $27-28 billion in annualized revenue at full rates, with all contracts including flexibility clauses allowing early termination.
How did SPCX stocks perform on Friday?
SPCX shares closed down 5.5% on Friday, marking its sixth consecutive day in the red. SPCX stocks closed at $123.99 on Friday, below its IPO price of $135.
