Earlier this month, Anthropic secured the entire output of the Colossus 1 data center near Memphis, Tennessee, by purchasing 300 megawatts of compute. This large-scale compute is costly, with Anthropic set to pay xAI $1.25 billion monthly until May 2029, with the first two months at a discounted rate due to xAI’s ramp-up. The total revenue for xAI may exceed $40 billion.
The transaction details were revealed in SpaceX’s S-1 filing with the SEC, stating the deal allows them to monetize unused compute capacity in their infrastructure, with either party able to terminate the contract with 90 days’ notice. SpaceX indicated plans for similar future service contracts.
This agreement positions xAI uniquely in the AI market, blending self-use data center operations with cloud services. Such a model, referred to as a “neocloud,” helps offset infrastructure costs. SpaceX views the strategy as a resourceful capital investment, despite xAI potentially having excess compute capacity. With declining usage of Grok, xAI’s AI assistant, they are selling available servers to a close competitor.