SpaceX in talks to supply Pentagon with billions in AI computing power, challenging cloud giants

Musk's SpaceX in talks to provide computing power to the Pentagon, WSJ reports

July 17 (Reuters) - Elon Musk's SpaceX (SPCX.O), opens new tab is in talks to provide the U.S. Department of Defense with access to data center capacity worth billions of dollars to run AI models, the Wall ⁠Street Journal reported on Friday, citing people familiar with the matter. According to the report, SpaceX employees have discussed plans to compete more directly with neocloud firms such as CoreWeave (CRWV.O), opens new tab ⁠by selling computing capacity to AI customers at lower prices. The discussions are ongoing and could ⁠still fall apart, WSJ reported. SpaceX and the Pentagon did not ⁠immediately respond to Reuters requests for comment. Reuters could ⁠not independently verify the report. Reporting by Anhata Rooprai in Bengaluru; Editing by Pooja Desai Our Standards: The Thomson Reuters Trust Principles., opens new tab

SpaceX Eager to Support the Pentagon's Lethal AI Models

Can't-miss innovations from the bleeding edge of science and tech After years of being engaged, it looks like SpaceX and the Pentagon are finally ready to send out save-the-dates. On Friday, the Wall Street Journal reported that Elon Musk's formerly-just-rockets company is now in talks with the Department of Defense over providing the military access to its data-center capacity for running AI models, tying the knot on their already close relationship. People familiar with the matter told the newspaper that the arrangement could cost the Pentagon billions of dollars, but stressed the talks are ongoing and could fall apart. Computing power is a precious commodity during this ever-raging AI boom, and SpaceX has it in spades. Musk has rapidly built data centers in Memphis, Tennessee and a lot of that capacity hasn't been tapped into, with Bloomberg reporting that his AI startup xAI is only using 11 percent of its total computing power. Selling this excess compute would help generate the company some much needed revenue, even if it directly benefits its rivals. SpaceX has struggled to be profitable, losing $5 billion last year. And xAI, which was folded into SpaceX before its IPO last month, burned through $6.4 billion over the same period. All the while, Musk has struggled to sell his Grok chatbot to businesses, as its capabilities lag behind leaders like Anthropic and ChatGPT. The real story, though, is the deepening ties between Musk's business empire and the Pentagon, which goes way back. SpaceX has worked with the military to deploy a secretive network of spy satellites, for example, and also had a small contract to experiment with building a rocket that could deliver military cargo across the globe. Those collaborations have gotten way bigger in the past year. In May, it won a $2.29 billion Space Force contract to build a network of satellites that could function as a military internet service, connecting weapon systems across the globe. That same month, it was awarded an even larger $4.16 billion contract to provide the technology to build a system that can track missiles and aircraft from orbit. To be clear, Musk's companies are far from the only tech leaders to be getting in bed with the Pentagon. Amazon, Google, Microsoft and Oracle all have similar deals for providing cloud computing capacity to the military, as well as for providing their AI models, the WSJ noted. But it's a particularly hypocritical road to be going down for Musk. When Musk cut off Starlink satellite access to the Ukrainian forces in 2023, he reasoned that he didn't want SpaceX to be "explicitly complicit in a major act of war and conflict escalation." Fast forward to this June, when a Pentagon official bragged that the military used Grok to fire 2,000 missiles at Iran during Operation Epic Fury, sparking a war that killed thousands of civilians in the country. More on SpaceX: SpaceX's Shares Tank After Starship Fails to Launch

Elon Musk's SpaceX in talks to supply the Pentagon with computing power: Report

According to the report, SpaceX employees have discussed plans to compete more directly with neocloud firms such as CoreWeave by selling computing capacity ⁠to AI customers at lower prices. Elon Musk's SpaceX is in talks to provide the U.S. Department of Defense with access to data center capacity worth billions of dollars to run AI models, the Wall Street Journal reported on Friday, ⁠citing ⁠people familiar with the matter. Such an agreement would extend the Pentagon's existing relationship with SpaceX, a key partner for rocket launches and satellite-based communications and missile tracking. According to the report, SpaceX employees have discussed plans to compete more directly with neocloud firms such as CoreWeave by selling computing capacity ⁠to AI customers at lower prices. Like many large enterprises, the Defense Department is moving to secure additional cloud-computing ⁠capacity to support intelligence agencies and military AI applications. Amazon said late last year it would invest up to $50 billion to expand AI and supercomputing capacity for U.S. government customers through its Amazon Web Services cloud business. Discussions between SpaceX and the Pentagon are ongoing and could still fall apart, WSJ reported. SpaceX and the Pentagon did not immediately respond to Reuters requests for comment. Reuters could not independently verify the report. The space firm has ⁠made similar deals in recent months. In June, SpaceX signed a multi-year cloud services agreement with Alphabet's Google, providing access to about 110,000 Nvidia chips and related computing infrastructure. Anthropic said in May it had struck a deal to use the full computing power of SpaceX's Colossus 1 facility in Memphis, gaining 300 megawatts of new capacity.

SpaceX AI Pentagon Deal Could Challenge Microsoft, Amazon - SpaceX (NASDAQ:SPCX)

SpaceX Wants To Power Pentagon AI. Microsoft, Amazon And Google Already Do. According to The Wall Street Journal, Elon Musk's SpaceX and the Pentagon are discussing a leasing agreement under which the company would rent computing capacity from its data centers, allowing military and intelligence agencies to run AI models on SpaceX's infrastructure. From Launching Rockets to Powering Pentagon AI The Pentagon is already one of SpaceX's largest customers. The company launches national security missions, provides military satellite communications through Starlink and supports missile-tracking initiatives. Leasing AI computing power would deepen that relationship, expanding SpaceX's role from delivering physical infrastructure to providing the computing infrastructure that powers artificial intelligence. For investors, that marks another step in the company's evolution. SpaceX has steadily diversified beyond launch services through Starlink, turning connectivity into a major business. AI computing could become another high-growth revenue stream as demand for compute continues to outpace supply. A New Competitive Landscape Unlike the launch industry, where SpaceX has established a commanding lead, AI infrastructure is one of the most competitive markets in technology. Microsoft's Azure, Amazon Web Services, Google Cloud and Oracle have spent years building cloud platforms for enterprise and government customers. A Pentagon AI compute deal would place SpaceX alongside those hyperscalers rather than traditional aerospace and defense contractors. That shift reflects a broader trend across the AI industry. As computing power becomes one of the world's most valuable resources, the lines between aerospace, cloud computing and artificial intelligence are beginning to blur. The reported talks also suggest SpaceX's AI ambitions extend beyond government work. The Wall Street Journal said the company already leases computing capacity to commercial AI customers, including Google, Anthropic and Reflection AI. If a Pentagon agreement materializes, it could reinforce a broader transformation already underway. SpaceX wouldn't simply be competing to launch the government's satellites or connect its troops -- it would also be competing to power the AI systems that increasingly shape military operations, putting it in direct competition with some of the world's largest cloud providers. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

SpaceX stock sees brief Pentagon AI bump, while CoreWeave slides on pricing threat By Investing.com

Investing.com -- SpaceX caught a fleeting intraday bid Friday afternoon, paring some losses after the Wall Street Journal reported the aerospace giant is in talks to supply billions of dollars in AI computing power to the Pentagon. However, the spike was short-lived and offered little respite from the stock's recent weakness, with shares ultimately remaining down 4.4%. The real market action happened elsewhere. While SpaceX investors largely faded the headline, traders zeroed in on a critical detail in the report: SpaceX's plans to aggressively undercut existing cloud-compute pure plays. Sources noted that SpaceX employees have discussed competing directly with providers like CoreWeave by offering AI capacity at significantly lower price points. That commentary immediately dragged CoreWeave's shares into negative territory as the market priced in the threat of a margin-crushing price war. The proposed multi-billion-dollar Pentagon deal would carve out dedicated data-center capacity for the Defense Department to run AI models. While talks are ongoing and could still fall apart, an agreement would deepen an already entrenched relationship. The Pentagon currently relies heavily on SpaceX for rocket launches, satellite communications, and missile tracking. Expanding that reliance into AI infrastructure will likely amplify existing concerns among national-security officials regarding the military's outsized dependence on Elon Musk's services. The negotiations come as the Defense Department races to lock down secure cloud-computing power for divisions like the National Security Agency and active warfighters deploying AI in their operations. It is an escalating arms race among major tech players: Amazon is pouring $50 billion into government-focused capacity, while Microsoft, Google, and Oracle remain heavily entrenched as prime cloud suppliers. With this latest move, SpaceX is signaling it wants a bigger piece of that pie -- and is willing to disrupt the broader market to get it.