Anthropic has reached a significant agreement to purchase 300 megawatts of compute capacity from the Colossus 1 data center near Memphis, Tennessee, marking a noteworthy move in the AI sector. The company will pay xAI $1.25 billion per month until May 2029, which includes discounted rates for the initial two months as xAI completes the ramp-up of its operations.
The overall deal could yield over $40 billion in revenue for xAI. The specifics of this transaction were disclosed in SpaceX’s S-1 filing with the SEC, which indicated that the arrangement allows for the monetization of unused compute capacity within SpaceX’s infrastructure. Both parties have the option to terminate the agreement with 90 days’ notice.
SpaceX’s filing stated, “We expect to enter into additional similar services contracts,” suggesting a strategic expansion in its services. The partnership positions xAI in a hybrid role within the AI market, where firms typically either build their own data centers or provide data center services to others, but rarely do both simultaneously. This developing model, known as a “neocloud,” enables AI companies to mitigate infrastructure costs by acting as a cloud provider when their own compute needs are not fully utilized.
SpaceX characterized the arrangement as an efficient use of resources, asserting, “We believe our dual monetization strategy provides multiple pathways to generate returns on invested capital.” Nonetheless, the situation hints at potential overbuilding of compute infrastructure by xAI, which appears to be seeking to monetize excess capacity prior to its public offering. Usage of Grok, xAI’s flagship AI assistant, has substantially decreased recently, resulting in available servers that xAI is now leasing to competitors.
