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xAI and SpaceX Are Revealing the True Cost of AI

  • Writer: Buster Wurm
    Buster Wurm
  • 2 days ago
  • 2 min read

 

Elon Musk’s AI startup, xAI, is leaning hard on SpaceX for both money and infrastructure. A relationship that shows just how expensive it’s become to compete in artificial intelligence. According to Bloomberg and The Wall Street Journal, billions in funding and infrastructure deals are binding these two companies together in ways that raise eyebrows.  

Bloomberg reports that SpaceX has invested about $5 billion in xAI, partly through direct investments and partly through business deals. That money is letting xAI scale up fast as it builds and trains large language models, which eat up massive amounts of capital. Training just one cutting-edge AI model can run into the hundreds of millions, mostly because of the energy and specialized chips involved.  

The Wall Street Journal points out that xAI is planning data centers so large they’re measured in gigawatts, putting them on par with the tech giants. To make that happen, xAI has lined up tens of thousands of high-end AI chips, with hardware costs alone potentially hitting the low double-digit billions over the next few years.

This is a big deal for SpaceX’s bottom line. The Journal notes the company brought in around $8-10 billion last year, mostly from launches and Starlink. So, committing multiple billions to xAI is no small thing, especially when SpaceX is already pouring several billion a year into developing Starship.  

Both outlets stress that this setup concentrates a lot of risk. If xAI’s models don’t catch on or if the AI hype cools off, SpaceX could take a hit, right when it’s already juggling major investments elsewhere. On the flip side, some argue that keeping funding in-house shields them from the wild swings happening in AI valuations on the open market.  

When you step back and look at the numbers, the scale of Musk’s bet becomes clear: he’s tiedtogether one of the world’s most expensive space ventures with an AI startup that’s spending like the biggest tech companies. How this plays out could influence not just xAI’s future, but the way AI gets funded industry wide. 


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