Just days before SpaceX’s planned IPO that could raise record amounts of cash, the space company has struck a massive deal with Google. The search giant will pay $920 million per month to use AI compute capacity at SpaceX data centers.
The agreement shows how desperately tech companies need computing power for AI workloads – and how SpaceX is trying to make money from its expensive data center investments ahead of going public. Google announced the deal in a regulatory filing on Friday.
Under the agreement, Google will use about 110,000 Nvidia graphics processing units plus other components housed in SpaceX facilities. The deal runs from October this year through June 2029 at the $920 million monthly rate, with capacity ramping up through September at a reduced fee.
There’s a catch though. If SpaceX fails to deliver access to the promised number of GPUs by September 30, 2026, Google can immediately end the agreement or accept fewer GPUs at a reduced rate after a one-month grace period. After this year, either party can terminate with 90 days’ notice.
A Google Cloud spokesperson told CNBC the deal ensures “bridge capacity to meet surging customer demand for our agent platform, Gemini Enterprise, which has been even higher than we expected.” Google launched Gemini Enterprise subscriptions for large businesses in October.
This marks SpaceX’s second major infrastructure deal since merging with Elon Musk’s AI company xAI in February. That transaction valued the combined entity at $1.25 trillion. Last month, Anthropic signed up to use all of SpaceX’s compute capacity at its Colossus 1 data center in Memphis, Tennessee.
The timing matters for several reasons. First, it shows the massive demand for AI computing power as companies race to build and deploy AI systems. Second, it gives SpaceX a way to monetize the expensive data centers it built for xAI’s Grok chatbot, which has struggled to compete with OpenAI and others.
SpaceX has been spending heavily on AI infrastructure. The company said capital expenditures in the first quarter totaled $10.1 billion – more than double from a year earlier. Most of that spending, $7.7 billion, went to AI investments.
But the AI business isn’t profitable yet. SpaceX’s AI segment recorded an operating loss of $2.5 billion in the quarter on just $818 million in revenue. Musk has promoted xAI’s Grok model as a rival to ChatGPT and Google’s offerings, but it hasn’t gained much market share.
The company also faces legal troubles. SpaceX faces multiple lawsuits and government probes after Grok enabled users to easily create non-consensual sexual images or deepfake porn. In March, following an exodus of talent from xAI, Musk said Grok needed to be rebuilt.
Meanwhile, Google is ramping up its own AI spending. The company revised its capital expenditure forecast this year to between $180 billion and $190 billion, up from its previous estimate. Alphabet said this week it plans to sell $85 billion in stock to meet “unprecedented customer demand.”
For Google parent Alphabet, the SpaceX relationship has been profitable in multiple ways. The company backed SpaceX when it was worth $12 billion in 2015. SpaceX is now aiming to go public next week at a valuation of over $1.75 trillion – a massive return on investment.
The infrastructure leasing market is getting crowded. SpaceX now competes with companies like CoreWeave and Nebius, often called neoclouds. These stocks fell on Friday as part of a broader tech selloff but bounced back after the SpaceX-Google announcement.
Interestingly, Google and SpaceX had a similar deal five years ago with roles reversed. Back then, Google supplied computing and networking resources to help SpaceX deliver internet service through its Starlink satellites. SpaceX installed ground stations at Google data centers, marking a win for Google in its competition with Amazon Web Services and Microsoft Azure.
The new deal reflects how much the landscape has changed. Now SpaceX is the one providing infrastructure, trying to compete in both connectivity through Starlink and AI through xAI against tech giants including Google, OpenAI, Anthropic, Meta, and Microsoft.
