Anthropic will pay xAI $1.25B per month for compute

Anthropic has entered into a significant agreement to purchase 300 megawatts of compute from xAI, securing the entire output of the Colossus 1 data center. This deal, valued at $1.25 billion per month through May 2029, could generate over $40 billion in revenue for xAI. For the first two months, a discounted rate applies as xAI completes its ramp-up.

Details of this transaction were revealed in SpaceX's S-1 filing with the SEC. The agreement allows xAI to monetize its unused compute capacity. Either party can terminate the contract with 90 days' notice.

xAI's strategy positions it uniquely in the AI market as a 'neocloud' provider. This model allows AI companies to offset infrastructure costs by acting as a cloud provider when their own usage does not meet capacity. SpaceX indicated that it expects to enter into additional similar service contracts.

This arrangement is seen by SpaceX as a savvy use of resources, offering multiple pathways to generate returns on invested capital. However, it also suggests that xAI may have overbuilt its compute capacity. The company is now selling this excess capacity to a competitor, potentially due to a significant drop in the usage of Grok, xAI's flagship AI assistant.