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Anthropic to pay $1.25B/month for xAI's data center
21 May 2026

Anthropic, a leading artificial intelligence (AI) company, has signed a major deal with xAI to buy 300 megawatts (MW) of compute power.

The agreement covers the full output of the Colossus 1 data center located near Memphis, Tennessee.

Anthropic will pay xAI an eye-popping $1.25 billion per month until May 2029, according to details from SpaceX's S-1 filing with the SEC.

Total revenue from this agreement could exceed $40 billion
Financial implications

The deal between Anthropic and xAI is not just a short-term arrangement, but one with long-term financial implications.

The total revenue from this agreement could exceed $40 billion for xAI.

The contract also includes a discounted rate for the first two months as xAI ramps up its operations to meet Anthropic's needs.

Termination flexibility for both parties
Deal disclosure

The details of the compute capacity deal were revealed in SpaceX's S-1 filing with the SEC.

The document stated that this agreement "allows us to monetize unused compute capacity in our infrastructure."

It also mentioned that either party can terminate the contract with a 90-day notice period, giving both companies some flexibility in their business operations.

'Neocloud' trend in AI market
Strategic shift

The deal has put xAI in a unique position in the AI market.

Most companies either build their own data centers or provide them for others to use, but rarely do both at the same time.

This new trend, called a "neocloud," allows AI companies to offset infrastructure costs by acting as a cloud provider when their own usage falls short of capacity.

SpaceX defends deal as smart use of resources
Resource management

SpaceX has defended the deal as a smart use of resources, saying their dual monetization strategy provides multiple ways to generate returns on invested capital.

However, it also hints that xAI may have overbuilt its compute capacity and needed a way to monetize it before going public.

The usage of Grok, xAI's flagship AI assistant, has declined sharply in recent months, leaving servers that the company is now selling to one of its closest competitors.