Google and SpaceX in talks to launch orbital data centers as AI compute race moves to space

Google and SpaceX Eye Partnership for Space-Based Data Centers

Google and SpaceX are in negotiations to collaborate on launching orbital data centers, according to a report from The Wall Street Journal citing sources familiar with the matter1

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. The potential partnership would see two competitors working together on what both companies view as the future of AI compute infrastructure3

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. This development arrives as SpaceX gears up for its $1.75 trillion IPO later this year, positioning orbital data centers as a key selling point to investors1

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. The search giant is also in discussions with other rocket-launch companies and is already collaborating with Planet Labs to design and build satellites for its space ambitions5

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Google's Project Suncatcher Aims for 2027 Launch

Google's Project Suncatcher, announced last November, represents the company's initiative to explore the feasibility of space-based data centers with plans to launch prototype satellites by 20271

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. The proposed system would deploy a network of satellites in a coordinated constellation, most likely in a dawn-dusk sun-synchronous low Earth orbit that keeps them bathed in nearly continuous sunlight4

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. The project intends to send satellites laden with Google Tensor Processing Units into orbit starting in 20272

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. Google invested $900 million in SpaceX back in 2015, according to regulatory filings, establishing a financial relationship that could facilitate this new collaboration1

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The Economics Behind Orbital Data Satellites

Both Sundar Pichai and Elon Musk have presented orbital data centers as an inevitability for the AI industry. "There's no doubt to me that a decade or so away, we'll be viewing it as a more normal way to build data centers," Pichai told Fox News in November3

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. Elon Musk has claimed that within three years, satellites would be the cheapest way to generate AI compute power3

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. The appeal centers on uninterrupted solar power availability and freedom from local backlash that terrestrial buildouts attract1

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. However, the cost of AI compute in space remains a significant barrier. Current launch costs sit at around $7,000 per kilogram for standard rideshare prices, while analysts estimate that orbital data centers would need costs to fall to around $200 per kilogram to reach financial equilibrium2

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Technical Challenges Facing Space-Based AI Compute

Despite the optimism from tech leaders, significant technical obstacles remain. Experts have expressed doubts about whether it's possible to carry out AI inference in space at scale3

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. GPUs in satellites would face constant cosmic radiation that could affect their ability to perform error-free calculations3

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. Heat dissipation presents another formidable challenge—in the near vacuum of space, the only way to dissipate heat is to slowly radiate it out, making cooling far more difficult than on Earth3

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. Maintenance poses yet another hurdle, as repair crews won't be readily available, requiring completely different engineering standards to ensure centers run autonomously for years4

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SpaceX IPO and Growing Dominance in Commercial Launches

This news has potential to boost the impending SpaceX IPO, which is expected to be the largest of all time, with valuations reaching $1.5 to $1.7 trillion2

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. SpaceX recently struck a partnership with Anthropic that could include "multiple gigawatts of orbital AI compute capacity" and filed an application in January with the FCC to launch data centers into orbit using up to one million satellites2

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. The company has made 165 launches in 2025, more than the rest of the world combined, up from 134 in 20242

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. SpaceX acquired xAI in February, and the combined entity is now pursuing orbital compute infrastructure aggressively1

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Environmental and Safety Concerns About Orbital Congestion

Independent researchers warn that low Earth orbit is becoming crowded, with some regions already approaching dangerous levels of orbital congestion and the risk of collisions on the rise4

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. Putting millions of satellites in low Earth orbit is very likely to have extremely detrimental effects on the planet's atmosphere and the ability of other companies and governments to fly spacecraft safely3

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. As SpaceX has already put 14,844 payloads in orbit and is reportedly only 218 units away from having launched as many satellites as every country on Earth since space became reachable, these concerns are becoming increasingly urgent2

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. The industry must navigate these environmental and safety considerations as it pursues the vision of space-based infrastructure for meeting the growing demands of AI applications.