Musk signs another mega deal! Alphabet Inc. Class C (GOOGL.US) spends 30 billion dollars to buy SpaceX's computing power.

Elon Musk's American space commercial and artificial intelligence company SpaceX has filed documents with the U.S. Securities and Exchange Commission (SEC) announcing that it has signed a cloud service agreement with Alphabet Inc. Class C (GOOGL.US) for access to computing capabilities, including approximately 110,000 NVIDIA Corporation GPUs, CPUs, memory, and other related components. Under the agreement, Alphabet Inc. Class C has agreed to pay SpaceX $9.2 billion per month from October 2026 to June 2029, totaling $294.4 billion over 32 months. The documents indicate that if SpaceX fails to deliver the promised quantity of GPUs by September 30, 2026, Alphabet Inc. Class C can immediately terminate the agreement after a one-month grace period, or accept the provided quantity of GPUs and reduce the monthly payments accordingly. After December 31, 2026, either party can terminate the agreement with 90 days notice. Alphabet Inc. Class C will retain ownership and intellectual property rights to its content, AI models, and related data. A spokesperson for Alphabet Inc. Class C Cloud stated that this agreement will help the company meet its AI service needs. In the latest financial report, Alphabet Inc. Class C Cloud's backlog orders (contracts signed but not yet confirmed income) nearly doubled from the previous quarter, exceeding $460 billion. The spokesperson stated, "This is a short-term and timely agreement designed to ensure that we have transitional capacity to meet the increased demand for our AI agent platform Gemini Enterprise, a demand that is even higher than we expected." While xAI's AI models are lagging behind competitors in programming capabilities, they are betting on their advantage in data center infrastructure. The three-year-old company has already built a data center in Memphis, Tennessee, and is expanding related facilities in Mississippi. Previously, SpaceX had signed a similar agreement with Anthropic. According to the agreement, Anthropic will pay xAI $1.25 billion per month until May 2029 to use the computing power of the Colossus and Colossus II data center clusters in Memphis, Tennessee. Although Musk later stated that SpaceX only agreed to lease the Colossus AI training data center cluster to Anthropic for six months, he added that the agreement "could potentially extend for several years." In addition to Anthropic, xAI also reached a partnership agreement with the programming tools startup Cursor in April, providing them with massive computing power support. The relationship between Alphabet Inc. Class C and SpaceX is both cooperative and competitive, mainly in the aspect of AI models. Earlier this year, SpaceX revealed that by the end of 2025, Alphabet Inc. Class C held a 6.11% stake in the company. It is estimated that after SpaceX merged with xAI, Musk's artificial intelligence and social media company, in February, Alphabet Inc. Class C currently holds about 5% of SpaceX's shares. Insiders said in May of this year that the cloud service agreement is not the only collaboration project that Alphabet Inc. Class C and SpaceX are negotiating. The two sides have also discussed launching equipment for Alphabet Inc. Class C's orbital data center testing project. Previously, Alphabet Inc. Class C stated that the company is exploring opportunities for collaboration with other launch service providers to advance its Project Suncatcher. SpaceX has been trying to increase its revenue through its subsidiary xAI and transform its AI business into a computing infrastructure provider - this was a key focus of the company's IPO pitch to investors. As a newcomer in the large model arena, xAI is in a period of high-intensity research and development, with monthly operating losses exceeding $300 million, net losses exceeding $4 billion in 2025, and no profitability in the short term. The market is generally concerned that after this acquisition, xAI's massive cash burn will be included in SpaceX's financial statements, diluting Starlink's profitability, and even leading to a situation where the public shareholders are footing the bill for Musk's personal entrepreneurial projects, harming the interests of public shareholders.