There's more to it: Anthropic & SpaceX (xAI) Deal Analysis

00:00:00: Yesterday Anthropic announced two interesting news which have an impact on developers and where there is a bit more behind those news than you might at first think.

00:00:14: Because they announced that there would be higher usage limits for using Claude which especially matters of course if you're using cloud code because chances are that like many others, you frequently hit those usage limits and felt them to be a bit too restrictive.

00:00:31: Especially for example when compared with the Codex usage limit.

00:00:35: AND the other big thing they announced yesterday is that they entered a compute deal rent the entire Colossus one data center, which is that data Center Elon Musk built in a record time.

00:00:55: In twenty-twenty four That they would rent The entire capacity Which is around three hundred megawatts.

00:01:02: so they Would use that for training or inference and therefore well have more Capacity to work with?

00:01:11: That of course has an impact on the usage limits They can provide though there's A bit More to it but it is important because Anthropic was heavily compute constrained and they still are.

00:01:23: That's fair.

00:01:24: to assess all these big AI companies, we're in this situation where essentially demand for tokens does or did not scale linearly Because of course, we nowadays have all these models that allow for longer running agentic coding sessions or whatever you're doing with them.

00:01:55: It's not just about coding.

00:01:57: These modern models and their agentic harnesses are pretty good at other tasks like data science as well because they also generate code there That's a different story, but because these models and the tools in which they run became so much more capable.

00:02:34: Enter this compute partnership with space X. Now what's interesting is that in this post here they share, as I mentioned immediately add those three hundred megawatts of new capacity which is over two hundred thousand of NVIDIA GPUs.

00:02:51: Again keep in mind that from twenty-twenty four but still thats a lot of compute and that joins their significant other compute announcements.

00:03:05: five gigawatts agreed both individually with Amazon and Google, but here it's worth noting that this is all about capacity of new capacity by the end of twenty-twenty six.

00:03:27: So yeah, we're not even close to those five gigawatts yet and for Google agreement it's also five gigawatt which will begin coming online in twenty twenty seven.

00:03:39: so that's all they are talking about.

00:03:42: ten gigawatths here xai data center are.

00:03:52: The question or one of the questions that comes up is what does it mean for XAI?

00:03:58: Don't they need this capacity, Is that the end of grok?

00:04:02: and the answer is no maybe well not the End Of GROK obviously but I think its fair to say if grok had some demand be somewhat similar or even close to what Anthropic is seeing, they would not be renting out that extra capacity.

00:04:25: Instead of course the case is clearly.

00:04:28: they don't need it for GROC.

00:04:30: you might wonder why?

00:04:31: And this colossus data center here which was built in record time one hundred and twenty two days This was just the first data center they built, essentially.

00:04:46: But XAI now has an even more powerful Colossus II cluster available for themselves so that can use THAT for training and inference!

00:04:56: That's not the only datacenter but also acquired another datacentre... The Mockrow Harder data center.

00:05:03: and xai is on a roadmap toward nearly two gigawatts of power with operations ramping up in twenty-twenty six.

00:05:11: So it's not like XAI gave away all their compute power, but of course apart from that they wouldn't do this if there were more demand for grog but as it earned some extra revenue of that.

00:05:28: And for Anthropic it means they now got more capacity available!

00:05:33: That then leads to those higher usage limits and I think this is all a bit more nuanced than you might think, so clearly Anthropic was heavily compute constrained are struggling to get enough compute.

00:05:51: I talked about that in another video and episode already, but of course compute is a big problem because Now of course Anthropic can increase those use trims because they now got a bit more capacity available.

00:06:22: That's great!

00:06:24: But in addition, I would make the argument that they're also under pressure to stay competitive there.

00:06:30: And that's also something i already argued for In another episode because as mentioned in the past we had of course get up co-pilot move To usage based billing.

00:06:42: now They have their own reasons.

00:06:44: they all so had a pricing model or they basically gave you A certain number Of requests For your payment for your subscription fee and charging requests instead of tokens is not ideal because since we have these longer running sessions it may be one request, but way more tokens than in the past.

00:07:09: But they could've also used to a token based measurement system.

00:07:21: Anthropic had those relatively strict usage limits.

00:07:26: Still a subscription, still token based but relatively strict when compared to Codex which of course kind is their big competitor OpenAI with there codecs models or the GPT-Five point five model now and the Codex tool and they're subscription offerings And you got way more generous amounts of usage out-of-codex, you still do get lots of usage.

00:07:51: And GPD is a pretty good model!

00:07:54: So naturally I think Anthropic has a big incentive to stay competitive and grow its market share.

00:08:03: amazing revenue growth, by the way if you wanna learn how to get most out of codecs and cloudcode.

00:08:15: Then check my courses or even get a membership which gives access for all my courses.

00:08:25: but as mentioned of course Anthropic is seeing strong growth.

00:08:29: They probably want to continue on that growth trajectory.

00:08:33: Also, of course since they have all these capacity or since they've got a capacity here coming up in the next year and so-so... ...they wanna utilize it.. they wanna grow even more based on THAT!

00:08:46: And they need the revenue ,the money at the end to pay for that capacity.

00:08:51: So clearly they wanna keep growing aggressively obviously without burning lots of money but They want to keep on growing, they wanna grow their market share so that eventually at some point.

00:09:18: But there is more.

00:09:20: There is more to that deal because I already mentioned, yeah XAI which of course part of SpaceX in case you didn't know They wouldn't have leased that.

00:09:32: Colossus one data center two and fropic if they needed it themselves.

00:09:35: clearly they don't.

00:09:38: but they can get another advantage out of that.

00:09:41: Because in that anthropic announcement?

00:09:43: There is this interesting sentence here As part of this agreement, we have also expressed interest in partnering with SpaceX to develop multiple gigawatts.

00:10:04: Kind of makes sense, I mean it is their thing shooting stuff into space.

00:10:09: It IS the argument that was being made in the end for acquiring XAI which a totally interesting deal on its own by the way.

00:10:18: Elon Musk buying Twitter?

00:10:19: on accident, then founding XAI.

00:10:22: Then having XAI by X Twitter and then having SpaceX buy X AI all with help of our investors.

00:10:30: that's a smart way to get richer.

00:10:33: but one argument is they want to launch those orbital data centers!

00:10:39: That was the reasoning for the deal of acquiring xai.

00:10:42: now they have Enfropic on board too Or do they?

00:10:46: Well, maybe not necessarily.

00:10:49: They have expressed interest so this could very well just be some sentence they agreed on to put in there So that SpaceX has some nice story for when it's trying to have its public offering, it's IPO later this year that they can say.

00:11:04: It is not just for their own data centers but also got Enfropic on board and so that a nice deal.

00:11:09: Enfrapic gets the Colossus One data center may use Orbital Data Centers in future but doesn't commit right now because there are some problems with Orbital data centers yet proven Good investments to put it like this and that they really beat data centers on earth And deliver significant advantages, but they may of course join.

00:11:33: Again for SpaceX It's nice to be able To point at Anthropic as a potential future customer For their IPO!

00:11:41: I think This is What worth knowing about this deal?

00:11:47: The good thing Is higher usage limits.

00:11:50: Also, of course in the future lots of capacity coming online for Enthropic.

00:11:55: but as I showed you hopefully there is a bit more to it.

00:11:59: If that's good or bad for us as developers and humanity has a whole different story then you can have different opinions on AI which i certainly do if you watch other episodes from me.

00:12:14: But thats whats happening here.