Anthropic will pay xAI $1.25B per month for compute
Source: TechCrunch
Image Credits: Jakub Porzycki / NurPhoto / Getty Images
Posted: 2:29 PM PDT · May 20, 2026
Deal Overview
Earlier this month, Anthropic surprised the AI world with a deal to buy 300 megawatts of compute—securing the entire output of the Colossus 1 data center near Memphis, Tennessee.
The scale of the compute makes the price steep: Anthropic will pay xAI $1.25 billion per month through May 2029, with a discounted rate for the first two months while xAI completes its ramp‑up. In total, the agreement could generate over $40 billion in revenue for xAI.
Transaction Details
- The terms were disclosed in SpaceX’s S‑1 filing with the SEC.
- The contract allows either party to terminate with 90 days’ notice.
- The filing notes, “We expect to enter into additional similar services contracts.”
Strategic Implications
The arrangement gives xAI a hybrid stance in the AI market. Most companies either:
- Build data centers for their own use, or
- Operate data centers as a service for others.
xAI is doing both, a model sometimes called a “neocloud.” This lets AI firms offset infrastructure costs by acting as a cloud provider when their own usage falls short of capacity.
SpaceX frames the deal as a savvy use of resources: “We believe our dual monetization strategy provides multiple pathways to generate returns on invested capital.” The subtext suggests that xAI has overbuilt its compute capacity and needed to monetize it ahead of a public offering. Usage of Grok—xAI’s flagship AI assistant—has dropped significantly in recent months, freeing up servers that the company is now selling to a close competitor.