(LR) Google CEO Sundar Pichai speaks with Tesla and SpaceX CEO Elon Musk as they arrive to attend the swearing-in ceremony of Donald Trump as the 47th US President at the Capitol Rotunda in Washington, DC on January 20, 2025.
Saul Loeb | AFP | Getty Images
Days before a planned IPO that is expected to raise a record amount of cash, SpaceX has signed deals with: google Providing AI computing power to search giants generates $920 million in revenue per month.
Google plans to spend about $110,000, according to a regulatory filing Friday. Nvidia SpaceX’s data centers house graphics processing units, central processors, memory, and other components. The contract runs from October this year to June 2029 at a cost of $920 million, with “capacity increases through September at reduced rates.”
SpaceX said in its filing that if it fails to “provide access to the promised amount of GPUs by September 30, 2026,” Google may immediately terminate the agreement or accept the number of GPUs provided at a reduced rate after a one-month grace period.
Starting this year, either party can terminate the agreement with 90 days’ notice.
A Google Cloud spokesperson told CNBC in an email that the deal was made “to ensure we have the bridging capacity to meet rapidly increasing customer demand for our agent platform, Gemini Enterprise, which exceeds our expectations.” In October, Google introduced Gemini Enterprise, a subscription for large enterprises.
Google’s agreement is the second major infrastructure deal announced by SpaceX, following its February merger with Elon Musk’s artificial intelligence company xAI, valuing the combined company at $1.25 trillion. Last month, Anthropic announced a deal to use all of SpaceX’s computing power at its Colossus 1 data center in Memphis, Tennessee.
Alphabet got a windfall by backing SpaceX. Musk’s company, valued at $12 billion when Google invested in it in 2015, is aiming to go public next week at a valuation of more than $1.75 trillion.
Musk is trying to drum up SpaceX’s AI story ahead of next week’s proposal to show that the company is reaping at least some benefit from its massive investment in multiple data centers in and around Memphis. SpaceX said in its prospectus that capital spending totaled $10.1 billion in the first quarter, more than double the year-ago period, with the bulk of that spending ($7.7 billion) going to AI.
Meanwhile, the business’ AI division posted an operating loss of $2.5 billion on revenue of just $818 million. Musk has touted xAI’s Grok models and chatbots as rivals to products from AI leaders OpenAI, Anthropic and Google, but his company’s products have yet to make a big impact on the burgeoning market.
SpaceXAI is facing multiple lawsuits and government investigations in the U.S. and abroad after Grok makes it easy for users to manipulate photos and videos of adults and children to create and share non-consensual sexual images and deepfake pornography.
In March, Musk said Grok needed to be restructured following a talent exodus from xAI. The company then struck a deal giving it an option to acquire AI coding startup Cursor for $60 billion.
Meanwhile, SpaceX is working to generate revenue from data centers originally built to handle Grok-related workflows.
“We believe our computing infrastructure and related strategies provide us with significant flexibility in how we allocate and monetize capacity,” SpaceX said in a section of its IPO filing about “computing services agreements with third parties.”
In its prospectus, SpaceX lists Google as a competitor in the connectivity space, with SpaceX operating its Starlink satellite internet service and Google operating its fiber broadband business. And in AI, SpaceX is not only Google, but also OpenAI, Anthropic, meta and microsoft.
Google is significantly increasing spending on AI to catch up with rival hyperscalers. In April, the company raised its outlook for capital spending for this year to $180 billion to $190 billion, from its previous forecast of $175 billion to $185 billion.
Alphabet announced this week that it plans to sell $85 billion in stock, including a $10 billion investment by Berkshire Hathaway, to meet “unprecedented customer demand.”
In entering the infrastructure leasing market, SpaceX is also competing with a group of companies commonly referred to as Neocloud. coreweave and Nevius. Those stocks fell on Friday as part of a broader tech selloff, but rebounded in part after SpaceX and Google’s announcements.
Google and SpaceX have had cloud agreements in the past, but their roles have been reversed. Five years ago, Google agreed to provide computing and networking resources to SpaceX to help provide internet services through its Starlink satellites. The agreement, which calls for SpaceX to install ground stations at Google’s data centers, marks a major victory for Google in its efforts to keep up. Amazon Web services and Microsoft Azure.
“We chose Google because of the quality of our network and the distribution and reach of our network,” Thomas Kurian, CEO of Google’s cloud group, said at the time.
—CNBC’s Jennifer Elias contributed to this report.
Watch: SpaceX is likely to acquire Cursor in the near future
