Elon Musk’s AI ambitions may be taking a more infrastructure-heavy turn.
SpaceX has signed another multibillion-dollar agreement to lease its data center capacity to an AI competitor, adding to similar deals with Anthropic and Google. This time, the deal is a $150 million-per-month contract with Reflection AI, starting in July and running until May 2029, according to a Bloomberg report.
Reflection is an AI startup founded by two former DeepMind researchers, Misha Laskin and Ioannis Antonoglou, which aims to build frontier open-weight models.
While this latest deal is smaller than the agreements with Anthropic and Google, which are reportedly worth $1.25 billion and $920 million a month, respectively, it is also the first to draw entirely on SpaceX's Colossus 2 data center.
When news broke of the Anthropic deal, SpaceX CEO Elon Musk pushed back against claims that the company had significant spare capacity due to weak demand for its chatbot. He said Colossus 2 would be used entirely for Grok and other first-party AI tools.
That no longer appears to be the case, with SpaceX now willing to share at least some of its capacity with rivals.
SpaceX neocloud division
The additional income will look good on SpaceX's balance sheet, as it needs to show profitability over a few financial quarters before it can be added to index funds such as the S&P 500. xAI reportedly lost $6.4 billion last year on $3.2 billion in revenue. It now has $25.3 billion in contracted revenue from these three capacity deals, which should go some way toward making the unit profitable in 2026.
It may not be a good look for investors who were betting on SpaceX becoming a leader in AI model development. In its pre-IPO forecast, Goldman Sachs projected that AI revenues would reach $322 billion by the end of the decade, making AI the primary revenue driver for the entire company.
Unless SpaceX can massively build out its data center infrastructure and effectively become the largest neocloud in the world, it is unlikely to reach that target through its current AI software revenues. It also has the TeraFab business, but that is unlikely to reach any meaningful operational status in the next few years.
Changes in xAI leadership
xAI has undergone significant changes in structure and staffing, as Musk has reportedly been unhappy with the company's output and focus.
All of the co-founders except Musk have left the division, with several pushed out in the latest shift toward coding and agents. xAI's failure to become a serious AI player has led some to call it a failure, while others have questioned whether its future lies more in the infrastructure and hardware side of AI.
Musk is unlikely to let his AI ambitions go without a fight, given how hard he has tried to take down rival OpenAI in court.
But without a compelling reason to choose Grok over Claude, GPT, or Gemini, it may be difficult for the company to continue investing at the same level as its rivals, even with the recent cash injection from going public.