Anthropic and xAI: a $1.25 Billion Monthly Deal

A Strategic Partnership Between Anthropic and xAI

Anthropic could invest up to $1.25 billion per month in xAI's computing infrastructure, until 2029. This information was revealed in an S-1 filing by SpaceX with the SEC. For xAI, the company founded by Elon Musk, this agreement represents an opportunity to transform its excess GPU capacity into a source of recurring revenue. For Anthropic, the creator of Claude, the goal is to secure essential computing power for its AI operations.

The contract stipulates that Anthropic will purchase the entirety of the production from the Colossus 1 data center, located near Memphis, Tennessee. Earlier this month, Anthropic surprised the industry by reserving 300 megawatts of computing capacity from xAI. This massive commitment underscores the strategic importance of having guaranteed computing power.

Substantial Revenue for xAI

This partnership could generate over $40 billion in cumulative revenue for xAI by May 2029. However, both companies have the option to terminate the agreement with 90 days notice, providing some flexibility in this long-term collaboration.

The Need for Computing Power for Anthropic

For Anthropic, securing sufficient GPU capacity has become crucial. Next-generation generative AI models require enormous volumes of computation for training, inference, and real-time business applications. By locking in this capacity, Anthropic reduces its dependence on traditional cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud.

The agreement also demonstrates that competition among AI players is becoming more cooperative. Although xAI and Anthropic are direct competitors in the generative models market, the necessity to pool critical resources drives collaborations. The preferential rate offered by xAI during the first two months of the agreement suggests that the company is still in the process of ramping up its industrial capabilities.

xAI's Strategy: Turning Surplus into Revenue

For xAI, this agreement represents a very aggressive monetization strategy. According to SpaceX, the contract allows for the monetization of unused computing capacity. However, this formulation raises market questions about the actual sizing of its infrastructure. In recent months, the use of Grok, the AI assistant developed by xAI, has reportedly slowed significantly, leaving servers available for large-scale leasing.

This strategy positions xAI in the neocloud category. Unlike historical hyperscalers, these new players build infrastructures primarily for their own AI models before reselling excess capacity to other companies in the sector. The model offers several business advantages: it allows for faster amortization of the enormous costs of Nvidia GPUs and energy-intensive data centers while creating a new source of recurring revenue ahead of a potential IPO.

However, this strategy also reveals that the growth of generative AI demands such significant investments that even industry leaders must now monetize every available unit of computation. The agreement between Anthropic and xAI could thus set a significant precedent. Ultimately, the AI market may evolve toward a model where specialized companies sell more computing power.