Alphabet Inc’s Google has agreed to pay Elon Musk’s Space Exploration Technologies Corp (SpaceX) US$920 million a month for computing power as part of a cloud services deal that runs through mid-2029, its second such agreement with an artificial intelligence (AI) competitor in a matter of weeks.
Google would pay SpaceX the monthly fee from October this year through June 2029, SpaceX said in a regulatory filing on Friday. That amounts to about US$30 billion through the time of the agreement.
If SpaceX fails to deliver access to Nvidia Corp chips as part of the deal by Sept. 30, Google has the right to terminate the contract, with a one-month grace period, the filing showed.
Photo: AFP
A Google Cloud spokesperson said the deal would help the company meet demand for its AI services. In its most recent earnings report, Alphabet said Google Cloud’s backlog — the measure of contracted work that has not been recorded as revenue yet — nearly doubled from the prior quarter to more than US$460 billion.
“This is a short-term, timely agreement to ensure we have bridge capacity to meet surging customer demand for our agent platform, Gemini Enterprise, which has been even higher than we expected,” the Google spokesperson said in a statement.
SpaceX previously signed a similar agreement with Anthropic PBC. The Musk-led company, through its xAI subsidiary, has been looking to shore up revenue and transform its AI business into a compute infrastructure provider — the key business the company has been touting as part of its initial public offering (IPO).
The contract gives Google access to 110,000 of Nvidia’s graphics processing unit chips, as well as central processing unit chips, memory chips and other related components. Based on the capacity of Nvidia’s H200 chips, that might represent more than 100 megawatts of computing power — or enough power to energize 75,000 homes at any given moment.
The cloud deal is not the only pact that Google and SpaceX have been engaged in talks over. The two companies had been discussing launching the search company’s test products for orbital data centers, a person familiar with the matter said last month. Google previously said it was exploring deals with other launch providers for what the company called Project Suncatcher.
Under the pact disclosed on Friday, either party also has the right to terminate the arrangement with 90 days’ notice — the same feature as in Anthropic’s deal.
The deal comes as SpaceX prepares to make its debut on NASDAQ under the symbol SPCX on Friday. The Texas-based company is offering about 555.6 million shares at US$135 each in a deal that could value it at about US$1.8 trillion and mark the biggest IPO in history.
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