SpaceX in Talks to Supply Pentagon With Billions in AI Computing Power

SpaceX is looking to add the Pentagon to its growing list of AI computing customers.

Elon Musk’s company is in talks with the U.S. Department of Defense to supply data-center capacity worth billions of dollars to run AI models, the Wall Street Journal reported Friday.

The potential deal would give the Pentagon more computing resources to support AI applications across the National Security Agency and warfighters. However, both SpaceX and the Pentagon declined to immediately comment on the report.

A Deal Still Being Negotiated

The talks remain fluid, and WSJ reports they could still collapse without an agreement. 

According to the Journal, SpaceX employees have discussed plans to compete with neocloud providers like CoreWeave by offering lower-cost AI computing services, a strategy that would extend to any eventual Pentagon arrangement. 

The deal under reported discussion could be worth several billion dollars. 

Reuters notes the Defense Department is moving to secure additional cloud computing capacity much like large private enterprises.

Following Amazon’s pledge late last year to invest up to $50 billion in expanding AI and supercomputing capacity for U.S. government customers through Amazon Web Services, the move underscores how central cloud contracts have become to defense technology spending.

Joining an Already Crowded Field of Pentagon Cloud Providers

SpaceX wouldn’t be entering an empty market. Yahoo Finance reports Amazon, Microsoft, Google, and Oracle already provide computing capacity to the Pentagon, positioning any SpaceX agreement as a new competitor among established federal cloud vendors. 

The push fits into SpaceX’s broader transformation into an AI infrastructure player: the company acquired Musk’s xAI earlier this year, went public and acquired Cursor in June, and folded Grok AI models and data centers into a business segment now called SpaceXAI. 

SpaceX has rapidly built large-scale data centers in Memphis and has floated the idea of placing data centers in space as a longer-term answer to the industry’s ongoing computing shortage.

Part of a Broader Pattern of AI Infrastructure Deals

A Pentagon contract would extend a pattern SpaceX has already established with other AI labs. 

Reuters reports SpaceX signed a multi-year cloud services agreement with Alphabet’s Google in June, providing access to roughly 110,000 Nvidia chips and related computing infrastructure.

This deal follows a May agreement in which Anthropic secured the full computing output of SpaceX’s Colossus 1 facility in Memphis, adding 300 megawatts of capacity. 

Yahoo Finance reports that the deal, combined with a separate agreement with Reflection AI, brings SpaceX’s three major cloud contracts to an estimated $28 billion in combined annualized revenue. 

However, each agreement includes flexibility clauses allowing early termination given how quickly the AI sector is shifting. 

Source: SpaceX in Talks to Provide Computing Power for Pentagon’s AI Push