Anthropic to pay Elon Musk’s xAI billions until 2029: Here is why
Follow Usnthropic will pay xAI around $1.25 billion every month to xAI until May 2029.
The deal could bring xAI more than $40 billion in revenue over the next few years.
The contract is said to allow either company to end the agreement with a 90-day notice.
Elon Musk’s AI company xAI has landed a massive deal with rival AI startup Anthropic that could bring in more than $40 billion in revenue over the next few years. The details were revealed in a recent filing submitted by SpaceX to the US Securities and Exchange Commission (SEC).
SurveyAnthropic has agreed to buy 300 megawatts worth of AI computing power from xAI’s Colossus 1 data center near Memphis. As per filing, Anthropic will pay xAI around $1.25 billion every month until May 2029, with a discounted rate during the first two months while xAI finishes scaling up the facility, reports TechCrunch.
The agreement gives Anthropic access to a huge amount of computing infrastructure, which is becoming increasingly important in the AI industry.
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In the filing, SpaceX said the deal ‘allows us to monetise unused compute capacity in our infrastructure.’ The company also noted, ‘We expect to enter into additional similar services contracts.’
The deal highlights an interesting shift in the AI market. Usually, companies either build data centers for their own AI systems or operate them as cloud services for other firms. However, xAI appears to be doing both at the same time. This approach is often referred to as a ‘neocloud’ model, where companies rent out extra computing power whenever they are not fully using it themselves.
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SpaceX defended the strategy in the filing, saying, ‘We believe our dual monetisation strategy provides multiple pathways to generate returns on invested capital.’
At the same time, the move has also raised questions about xAI’s current computing needs. Reports suggest that usage of Grok, xAI’s AI chatbot, has declined in recent months. This may have left the company with more unused servers than expected.
The contract is said to allow either company to end the agreement with a 90-day notice.
