[kentm]

SpaceX is incredibly exciting, but I was skeptical when XAI and Twitter were rolled into it. The S-1 here makes it even more disappointing.

I did want a piece of SpaceX but the valuation here is pretty eye watering compared to the fundamentals. I don't think I can put my money into this, although I suspect it will still do gangbusters based on hype and momentum.

Its also a real shame that SpaceX's competitors have not been able to get the same level of momentum. I know Starship has been delayed but its still hard to argue with total mass to orbit they're achieving right now.

[etempleton]

SpaceX would be an interesting IPO without XAI. It is hemorrhaging money and is in what, 6th place in the AI race while hemorrhaging X subscribers every month. Theoretically the company could focus on what is profitable and be strong fundamental company, but this is Elon we are talking about he is going to do whatever he wants to do.

[kentm]

To be honest, it could be one with XAi too. Im no fan of Musk and Grok but the deal with Anthropic pointed out by other contributors isn't nothing. And I don't think SpaceX losing money at this stage isn't quite the problem that people think it is -- as someone who as worked at companies losing money and then going on to make quite a bit. Revenue growth is there.

The issue is that none of this is really worth $2T now. Yes, you might expect that SpaceX could launch Starship, build space-based datacenters, get a good foothold on the AI market, and grow Twitter. But you don't want to pay for future performance now, you want it to be discounted because you're taking on the risk that those things don't happen. $2T feels like expecting that story has already been actualized.

[amluto]

The deal with Anthropic, even if good, doesn’t seem repeatable.

Right now, quite a few companies are discovering that the can turn inference capacity into revenue. Anthropic also can turn inference capacity into happy customers and mindshare, and they can turn lack of inference capacity into sad customers that might jump ship to OpenAI. And Anthropic wants to IPO, and they want to be as close to #1 as possible. And this whole phenomenon, industry-wide, has caused the demand for fancy chips to outstrip supply. Two years ago, DRAM was a low-margin industry, and now it’s not. If you bought a 5090 when it came out for around MSRP, you could resell it now at a healthy profit.

xAI appears to have effectively resold their datacenter at a healthy profit.

Sure, maybe xAI will try to bet that they can build another datacenter and sell/lease it at a healthy profit, but lots of players are trying to make that bet (bottlenecked by power and chip availability). And those bets could easily fail. And the players who don’t have adequate competition (SK Hynix, Micron, TSMC, etc) are going to jack up prices to try to capture more of the upside. And players like DeepSeek and Alibaba want to drive down the need for FLOPs and DRAM, because they don’t have enough and because they have a shortage of those but they don’t have a shortage of excellent AI development talent.

Oh, and China will build its datacenters on the ground, backed by more solar capacity than SpaceX can even dream of launching, and those datacenters will compete. And CXMT and Huawei will do everything in their power to ramp their own production, and SpaceX is not about to get first dibs.

On the bright side, Tesla’s AI5 finally taped out, and SpaceX will surely get some of those.

So maybe SpaceX will find $20bn of GPUs that they can resell or lease for $40bn of discounted revenue, but they could just as easily not find those GPUs or they might only get $17bn of discounted revenue and lose money on the whole affair.

[electriclove]

The assumptions are that more compute (energy, chips) is needed to get more capable models AND more capable models will result in more spending by companies. That has been correct so far.

Yes, energy and chips are some of the bottlenecks. SpaceX has a potential solution (solar powered data centers in orbit) where they are uniquely advantaged - no one can launch as much or as cheaply as they can.

[amluto]

Datacenters in space might help with energy (that’s a big if, but let’s suppose it works out). How does it help with chips? The chips are still made on Earth, but once you launch them, you add some radiation exposure and you also add a dramatic demise in five years or so. Meanwhile an RTX 3090 still sells for $500 or so.

[electriclove]

In addition to working with Intel and others, there is the Terafan initiative: https://terafab.ai/

[etempleton]

The deal with Anthropic gives me more pause about the whole market. More circular spending. They are all propping each other up making it look like they have more revenue than they really have. I think Open AIs S-1 will be just as crazy. I don't think there is any rationality or plan to all of this. AI doesn't pay for itself. It won't for a very long time.

[eightysixfour]

Anthropic showed operating profit (NOT profit) this quarter: https://www.wsj.com/tech/ai/mind-blowing-growth-is-about-to-...

Demand is there, money is coming in to these companies from customers. It isn't all circular.

[atonse]

Not really, this seems to be a very traditional "we need more cores, captain!" and "here's a datacenter with cores" rental.

Anthropic has grown 80x this year (according to their CEO). They are probably desperate to buy more inference compute for things like Claude Code, not for future investments. In the mean time, Grok seems to not have enough traction to utilize all the spare compute xAI has built with Colossus I and II.

This is one of those cases that shows that Elon is exceptionally better at atoms than he seems to be on the software side.

[aeternum]

Have you used Claude Code and you still believe AI doesn't pay for itself?

[bmau5]

You'll get a piece regardless if you're in index funds, as they're being strong-armed into buying at this awful price

[ericd]

I think this only applies currently for the Nasdaq index, and the only Nasdaq index fund that comes to mind is QQQ. I think fewer people are currently being hit than are worried about it.

[simantel]

Total market funds like VTSAX (the largest mutual fund in the world) will have to buy it as well.

[ericd]

Yeah, but on the normal, longer timeline? The fuckery around indices was that Nasdaq changed their rules for it to include it much more quickly, but that was limited to Nasdaq, no?

[sethops1]

They aren't being strong-armed, NASDAQ is literally changing the rules to appease Musk and get in on the grift. Move your money elsewhere while you still can.

[kentm]

Its unfortunate that its being fast tracked and I'm really annoyed that NASDAQ is doing this. But I think that the impact should be relatively minimal, at least for the funds I hold. I really just find the transparent grift annoying.

[electriclove]

Hopefully their competitors will keep advancing but that just reinforces that how hard space is and that SpaceX is doing things no one else currently can.