Is xAI a neocloud now?
Key takeaways
- It s a huge deal for x AI, likely worth billions of dollars.
- It’s tempting to see the arrangement as a shot at OpenAI amid the ongoing lawsuit.
- In the short term, there’s an obvious logic at work. xAI’s existing products are mostly focused on Grok, which has seen plummeting usage since the image generation debacles earlier this year.
Why this matters: a development in AI with implications for how people work, create, and decide.
On Wednesday, x AI and Anthropic announced a surprise partnership that has the Claude-maker buying out “all of the compute capacity at [x AI’s] Colossus 1 data center,” roughly 300MW that allowed Anthropic to immediately raise its usage limits. It s a huge deal for x AI, likely worth billions of dollars. More importantly, it immediately monetized one of the company s most impressive accomplishments, turning x AI from a consumer to a provider of compute.
It’s tempting to see the arrangement as a shot at OpenAI amid the ongoing lawsuit. But Musk’s explanation on X was that xAI had already moved training to a newer data center, Colossus 2, and xAI simply didn’t need them both.
In the short term, there’s an obvious logic at work. xAI’s existing products are mostly focused on Grok, which has seen plummeting usage since the image generation debacles earlier this year. If xAI’s data center buildout is that much more than what Grok needs to operate, partnering with Anthropic adds a lot of green to the balance sheet. This is especially useful as the company, now combined with SpaceX, speeds toward an IPO. More broadly, having Anthropic lined up as a customer makes it easier to believe that SpaceX’s orbital data center play might actually work.