After years of being engaged, it looks like SpaceX and the Pentagon are finally ready to send out save-the-dates.
On Friday, the Wall Street Journal reported that Elon Musk’s formerly-just-rockets company is now in talks with the Department of Defense over providing the military access to its data-center capacity for running AI models, tying the knot on their already close relationship.
People familiar with the matter told the newspaper that the arrangement could cost the Pentagon billions of dollars, but stressed the talks are ongoing and could fall apart.
Computing power is a precious commodity during this ever-raging AI boom, and SpaceX has it in spades. Musk has rapidly built data centers in Memphis, Tennessee and a lot of that capacity hasn’t been tapped into, with Bloomberg reporting that his AI startup xAI is only using 11 percent of its total computing power.
Selling this excess compute would help generate the company some much needed revenue, even if it directly benefits its rivals. SpaceX has struggled to be profitable, losing $5 billion last year. And xAI, which was folded into SpaceX before its IPO last month, burned through $6.4 billion over the same period. All the while, Musk has struggled to sell his Grok chatbot to businesses, as its capabilities lag behind leaders like Anthropic and ChatGPT.
The real story, though, is the deepening ties between Musk’s business empire and the Pentagon, which goes way back. SpaceX has worked with the military to deploy a secretive network of spy satellites, for example, and also had a small contract to experiment with building a rocket that could deliver military cargo across the globe.
Those collaborations have gotten way bigger in the past year. In May, it won a $2.29 billion Space Force contract to build a network of satellites that could function as a military internet service, connecting weapon systems across the globe. That same month, it was awarded an even larger $4.16 billion contract to provide the technology to build a system that can track missiles and aircraft from orbit.
To be clear, Musk’s companies are far from the only tech leaders to be getting in bed with the Pentagon. Amazon, Google, Microsoft and Oracle all have similar deals for providing cloud computing capacity to the military, as well as for providing their AI models, the WSJ noted.
But it’s a particularly hypocritical road to be going down for Musk. When Musk cut off Starlink satellite access to the Ukrainian forces in 2023, he reasoned that he didn’t want SpaceX to be “explicitly complicit in a major act of war and conflict escalation.” Fast forward to this June, when a Pentagon official bragged that the military used Grok to fire 2,000 missiles at Iran during Operation Epic Fury, sparking a war that killed thousands of civilians in the country.
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