SpaceX-Google pact fuels debate over IPO valuation

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SpaceX deal with Google draws attention

Highlights

Google agreed to pay SpaceX about $920 million a month for AI compute capacity.
Anthropic has a separate deal worth about $1.25 billion a month.
The two contracts could add more than $25 billion in annualized revenue.

Google has agreed to pay SpaceX about $920 million a month from October 2026 through June 2029 for access to roughly 110,000 Nvidia GPUs, along with CPUs, memory, and other infrastructure. The capacity is expected to ramp up before the full monthly fee takes effect, and the agreement includes termination rights if delivery targets are not met, Yahoo! Finance reports.

AI revenue changes the IPO story

The Google contract follows a separate agreement with Anthropic, which is renting SpaceX data-center capacity for about $1.25 billion a month. Together, the two arrangements could add more than $25 billion in annualized revenue, a major boost for a company preparing for an IPO expected on June 12 at a valuation reported near $1.77 trillion.

That scale helps explain why investors are paying close attention. SpaceX has long been valued on the strength of its launch business, Starlink, defense work and Elon Musk’s broader technology ambitions. But the new compute deals push the company further into AI infrastructure, turning data-center capacity into a central part of the pitch to public-market investors.

The shift is important because SpaceX has also disclosed heavy losses in its AI division, with costs accelerating in the first quarter. New cloud-service contracts help offset that pressure and make the company’s valuation easier to justify on a revenue multiple basis.

Timing and cancellation terms raise questions

The concern is not only the size of the deals but also their structure. Both contracts appear to be multiyear agreements, but they also include relatively short cancellation windows. Google can walk away if SpaceX fails to deliver enough chips on schedule, and other terms allow termination with notice after the initial period.

That flexibility matters because investors may treat the contracts as recurring revenue, while customers may view them as bridge capacity for a period of intense AI demand. If demand shifts, or if SpaceX cannot bring enough infrastructure online, the revenue may look less durable than headline numbers suggest.

Another issue is Alphabet’s existing stake in SpaceX. Google’s parent has been an investor in SpaceX since 2015, which gives the transaction an added layer of complexity. The deal improves SpaceX’s revenue profile before the IPO, while Alphabet also benefits if SpaceX’s valuation rises.

The first market test

The IPO will show whether investors see the compute deals as a sign of durable growth or as a late-stage boost to the offering narrative. The bullish case is clear: SpaceX now combines space, satellites, AI infrastructure, defense demand, and Musk’s investor following.

The risk is that public buyers may demand more proof that AI compute revenue can last.

Earlier, we reported that SpaceX loses early S&P 500 entry as rules stay unchanged.

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