00:00 Speaker A
I want to dig into these AI data center deals for for SpaceX. You’ve been writing about that. Can you just, first of all, just frame that? How big are these deals?
00:10 Speaker B
Well, you know, we talk about how great it was for SpaceX to, you know, when when Anthropic first signed a deal with with SpaceX to use some of that Colossus uh data data center uh compute there. So, at that time, Anthropic signed a deal with for 1.25 billion a month for about three years of of compute service, right? And then we had Google uh signed a similar deal with SpaceX for 920 million a month again for about three years. So, we’re talking about $26 billion a year in additional revenue
00:46 Speaker B
for a company that this for only the last month or so, right? For a company that had about 18 and a half last year, right? So you have a massive run-up there in in sort of that revenue story, right? So the question is, you know,
01:00 Speaker B
you have these deals happening, we had them signing months before the IPO. Uh people are kind of raising eyebrows as to why is this happening now?
01:04 Speaker A
Well, I that is an important point. There are skeptics raising questions about the deals and also the timing of the deals.
01:14 Speaker B
Right. I mean, what just last week it was with SpaceX, right? With with uh Google and that’s essentially a company that owns 6% of of that’s we’ll get to that part later. But essentially, um, I talked to Cory Johnson, your buddy, right? Pace with Capital, right? So he’s so friend of the show. friend of the show. Yeah. And he says, quote, I can safely say SpaceX is the first company to ever add 26 billion in ARR between the date of the IPO filing with the SEC and the first trade, right? So he’s pointing that out. Just this is a dramatic pivot for XAI from
01:52 Speaker B
artificial AI intelligence provider to server farm. And he argues that being a server farm should necessitate a much lower multiple than let’s say if you’re providing grock services. So that’s what that’s the bearish case on this.
02:08 Speaker A
So the skeptics are basically raising, they’re throwing a yellow flag on what they see as circular circular financing.
02:16 Speaker B
Yeah, that that that. So in addition to the fact that we have, you know, a very expensive compute deal that’s being, that’s being, you know, renting out servers to someone. It’s not exactly a high margin business, right? Um, you have the fact that SpaceX and and and and Google as a 6% owner of of SpaceX, kind of helps if you sign a multi-billion dollar deal a year. Uh that would help that that that case for the for the IPO, which is being marketed right now. Uh we’re hearing what, four times oversubscribed based on Bloomberg reporting, which
02:51 Speaker B
goes to show you. We’re we’re talking about these these eyebrows being raised, but people are still bullish on the stock.
03:00 Speaker A
Well what Bulls also say, listen, that the bull case is strong. And maybe they’ll say, listen, you know what, a little negative headline, a little negative sentiment. Maybe that it’s actually a positive.
03:12 Speaker B
So, so Gene Munster, right, Deepwater uh research. long time tech analyst, market guy. Yeah, Gene Munster said that, he says that, quote, I think this is this is bullish for the stock. The the bearish story he’s hearing, at least for the first day, he thinks it’s a good thing. Uh but I mean, his overall picture is, what are you buying with SpaceX? It’s this ma this vision of the future that’s that’s a multi-generational thing, right? You’re talking about, you know, you’re talking about things like
03:41 Speaker B
uh rapid revenue growth, data center stuff aside, right? Large TAM, space, AI, national defense, the Elon factor, the Elon mythology of Musk. the Elon premium.
