SpaceX’s $500 Billion AI Data Center Gamble Has Real Revenue Behind It, Says FT’s John Foley

Elon Musk‘s SpaceX (NASDAQ:SPCX) could require as much as $500 billion in total investment to build out its AI data centers, but renting that computing power to other companies may be a sensible business, according to John Foley, head of the Financial Times’ Lex column. Musk wants to expand SpaceX’s AI computing capacity from 1.4 gigawatts in June to close to 10 gigawatts by the end of 2027. He told investors in August that the company was applying its rocket-building expertise to “scaling terrestrial data centers.” Speaking on Prof G Markets Thursday, Foley estimated that building each gigawatt costs roughly $50 billion, putting the total for 10 gigawatts at $500 billion. That represents the upper end of SpaceX’s ambitions, not an announced spending budget. Why the Business Could Work Foley said it would be “not unwise” for Musk to rent data centers to customers “who are more desperate than he is,” provided he can build them quickly. Unlike Musk’s more speculative plans to put data centers in orbit, renting computing power on Earth already has paying customers. SpaceX sells computing capacity to Anthropic and Alphabet Inc. (NASDAQ:GOOGL) subsidiary Google under agreements worth $1.25 billion and $920 million a month, respectively, and has also held talks with Microsoft Corp. (NASDAQ:MSFT) about a similar arrangement. The Anthropic and Google contracts represent approximately $26 billion in annualized payments once operating at their full stated rates. SpaceX CFO Bret Johnsen has said new computing investments can pay for themselves in less than a year. Foley noted that SpaceX has roughly $90 billion in cash, far short of the estimated $500 billion cost. However, if new data centers pay for themselves as quickly as management claims, their earnings could help finance further construction. The $500 Billion Catch Foley also questioned what happens to rental prices while SpaceX builds. If competitors bring more capacity online, falling prices could undermine the exceptional returns supporting today’s investments. Customers can leave, too. SpaceX’s agreements with Anthropic and Google allow termination on 90 days’ notice after their respective initial periods, potentially leaving expensive equipment without a customer. Meanwhile, SpaceX is reportedly seeking another $40 billion to purchase Nvidia Corp. (NASDAQ:NVDA) chips. Prediction traders expect more data centers on Earth, but remain skeptical about putting them in space. On Kalshi, traders give the U.S. a 75% chance of reaching at least 5,100 data centers by year-end. A separate Kalshi market gives a one-megawatt orbital data center just a 14% chance of going live before 2028, rising to 39% before 2035. SpaceX shares fell 1% Thursday to $165. Image: Shutterstock Kalshi and Benzinga have an existing data collaboration agreement. Read Also: CoreWeave’s $2.6 Billion AI Loan Has a Hidden Risk: Uptime Failures Could Force Early Debt Paydowns