SpaceX in talks with Pentagon for billions in AI computing power as military races to secure capacity

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 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.