A New Chapter in AI Infrastructure
Elon Musk, the founder of X and SpaceX, has made a surprising move by leasing one of his most valuable assets to Anthropic, an artificial intelligence lab. This development comes after Musk previously labeled Anthropic as “evil” and “misanthropic.” However, the recent deal suggests a shift in perspective, with Musk offering access to the world’s largest supercomputer, Colossus 1.
This lease is not just a gesture of goodwill towards Anthropic but also serves a strategic purpose. Analysts suggest that the deal is more about preparing for SpaceX’s upcoming Initial Public Offering (IPO) than it is about supporting Anthropic as a company. With an expected valuation between $1.75 trillion and $2 trillion, the IPO needs a strong narrative to attract investors.
Strategic Moves for SpaceX
The deal with Anthropic provides SpaceX with a marquee AI customer, which adds credibility to its cloud-infrastructure business. According to Antoine Chkaiban, an analyst at New Street Research, the Anthropic deal could generate $3 billion to $4 billion in annual revenue for SpaceX, with over $2.5 billion in cash profit. The margins are impressive, given that the data center is already built, reducing the need for additional capital expenditure.
Musk’s decision to dissolve his AI company xAI into SpaceX (to make SpaceXAi) further solidifies this strategy. By becoming a landlord of AI infrastructure, Musk is positioning himself as a key player in the AI industry.
The Hyperscaler Pivot
Colossus 1, equipped with roughly 220,000 Nvidia GPUs, was built to train Grok, Musk’s AI assistant. However, Grok hasn’t filled the capacity of the supercomputer. Chkaiban estimates that Grok generates less than $1 billion in annualized revenue, while Anthropic is on track for over $40 billion. This disparity makes the deal attractive for both parties.
By leasing Colossus 1 to Anthronic, Musk can utilize his excess compute power, while Anthropic gains access to the necessary infrastructure. This arrangement allows Musk to skip the costly step of paying hyperscalers like AWS, Microsoft Azure, or Google Cloud for compute services.
Skepticism and Challenges
Despite the potential benefits, some experts remain skeptical about Musk’s ability to compete with established hyperscalers. Andrew Moore, former head of Google Cloud AI and CEO of Lovelace AI, noted that big enterprise customers often choose data centers based on location, energy costs, and reliability. Building a single massive data center in Memphis doesn’t replicate the global footprint of AWS.
Moore added that while he wouldn’t bet against Musk’s ability to achieve great things, the challenge of competing with AWS is significant. “The battle is not just who’s got the most compute servers,” he said.
The Kill-Switch Clause
One of the most intriguing aspects of the deal is the kill-switch clause. In a reply on X, Musk stated that SpaceX reserves the right to reclaim the compute if Anthropic’s AI engages in actions that harm humanity. While this clause wasn’t included in the formal press release, its potential enforceability gives Musk a powerful leverage over one of the leading AI labs.
This clause highlights the significant power Musk now holds, especially considering his previous stance on AI as an existential threat. Moore, who was dean of computer science at Carnegie Mellon during Musk’s loudest existential-risk phase, remembers him as one of the loud voices warning about AI risks. Now, Musk claims AI will usher in a new era of abundance.
Contingency Plans and Uncertainty
Anthropic is likely to have fallback plans, as frontier AI labs typically avoid single-sourcing their infrastructure. Moore suggested that Anthropic will be working aggressively on compute efficiency in the background. “They will have contingency plans in three months, six months, twelve months,” he said.
However, neither side gets to walk away clean. Gene Munster, managing partner at Deepwater Asset Management, estimated the odds of the deal still existing in two years at 80%. The other 20% is a bet on Musk himself. “What makes it unique is Elon’s history,” Munster said. “He can change his mind. It’s less about the actual provision; it’s more just about who’s running the provision.”
The Stakes Are Enormous
The stakes are enormous, with everyone trying to get through the next six months. They’ll do whatever it takes. As the AI landscape continues to evolve, the relationship between Musk, SpaceX, and Anthropic will be closely watched.
