I don’t think it matters that much for Google. They need to not fall hopelessly behind, but I don’t think there’s a strong economic reason for Google to burn the kind of capex that the frontier labs are burning. Strategically, I think they’re probably doing better than OpenAI and Anthropic. The Gemini models are open, and they are what researchers are working with (see neuronpedia as an example). Over time, this will give them a strategic advantage for the same reasons that open source wins over proprietary. Meanwhile, OpenAI and Anthropic have massive capex that needs to be returned to investors while their margins are being undercut by Kimi/Deepseek/Qwen. Google can wait around for the coming frontier lab profitability crisis and cruise right on by with their Apple contract and owned data centers to pick up the pieces and exceed the existing frontier labs.
Google, of all companies, much vaunted (as in your comment!) for its huge infrastructure footprint, is renting compute from SpaceX to the tune of almost a billion a month: https://techcrunch.com/2026/06/05/google-will-pay-spacex-920...
This is in addition to bumping their CapEx spend to the extent their cash flow turned negative for the first time ever this quarter: https://arstechnica.com/google/2026/07/google-just-had-its-f...
The world doesn’t realize how desperately compute-crunched hyperscalers are to meet AI demand.
This is a better problem to have than SpaceX, which is renting out capacity obviously because it’s own AI products aren’t selling.
$12B/year is nothing to a company that makes 11x as much in profit. The question is whether that $12B can be turned into more profit.
A deal with a company Google has a share of, announced a week before their IPO, with very non-committal terms and ramp period protections delivered in one large block on short term notice priced likely at the high end of what Google charges for A4X instances anyway.
I don’t think this reflects desperation as much as strategy.
I dunno if it's a sound strategy that involves repeatedly telling investors [1] and employees [2] over multiple quarters that you are desperate for compute, including leaving a triple-digit billion backlog on the table [3], and then spending so much on CapEx that you have your first negative cash flow quarter ever and taking the inevitable hit to the stock [4], while turning away a large paying customer (who also happen to be a competitor) [5] ;-)
[1] https://www.mindstudio.ai/blog/sundar-pichai-google-compute-...
[2] https://www.cnbc.com/2025/11/21/google-must-double-ai-servin...
[3] https://www.bloomberg.com/news/articles/2026-07-22/google-sa...
[4] https://arstechnica.com/google/2026/07/google-just-had-its-f...
[5] https://thenextweb.com/news/google-caps-meta-gemini-compute-...
This move was purely to pump up SpaceX stock price at its current absurd valuation b/c Google owns something like 6% of SpaceX
By your own math, doing this would have required SpaceX stock to go up $200B just to break even, and then Google would have to liquidate it.
"The company raised its full-year 2026 capex forecast to between $195 billion and $205 billion, with further significant increases planned for 2027." - Alphabet.
I think ~$200B is just for AI infrastructure capex. Fun fact: that's nearly what the 3rd largest military in the world (Russia) is spending on a land war in Europe.
This is against a $500B+ backlog of demand, which is mostly from OAI and Anthropic.