By Al Root
AI-related valuations might be a bubble. No one told Google parent Alphabet, though.
On Friday, SpaceX entered into a cloud service agreement with Google. The latter will pay $920 million a month for access to about 110,000 Nvidia GPUs.
Anthropic is paying $1.5 billion a month for access to 325,000 Nvidia GPUs. The price of AI computing seems to be going up. Anthropic is paying about $3,800 per GPU a month. Alphabet is paying about $8,400.
The agreement runs through June 2029. The agreement can be terminated by either party after December 2026.
The deal comes at a near-perfect time for SpaceX. Its record-setting IPO comes next week, and investors are wondering if the company, which is generating AI losses, is worth $1.8 trillion. Another $11 billion in annual revenue only helps bulls' arguments.
With the Anthropic and Google agreements, SpaceX's AI business, formerly xAI, has secured $26 billion in annual revenue in a matter of weeks.
That might help calm investors' nerves on Friday. The Nasdaq Composite was down 3.9% after a hot jobs report stoked fears of interest rate hikes. Nvidia stock was down 5.5%. Alphabet stock was off 2.1%.
The commercial agreement comes after Alphabet completed the largest secondary offering in history, raising $80 billion, to build out its AI infrastructure to meet "unprecedented customer demand."
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 05, 2026 15:54 ET (19:54 GMT)
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