xAI, founded by Musk, is transforming into a cloud computing company.

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Will xAIbecome the next CoreWeave?

This week, SpaceX announced that its xAI division reached a computing power supply agreement with AI company Anthropic, providing the latter with computational resources. Just a few weeks ago, xAI had signed a similar deal with AI programming startup Cursor. Musk soon responded on the X platform, characterizing these deals as an opportunity for brand transformation—he stated that xAI will no longer exist as an independent company, but will be renamed SpaceXAI and become the AI product line under SpaceX.

Analysts believe these moves are quite rare in the AI industry. Currently, AI companies with leading models are all striving to expand their own computing power, with almost no precedent for actively supplying idle resources to others. Therefore, the reason behind xAI taking the route of leasing out computing power may not be optimistic: the Grok model has yet to gain sufficient market recognition, resulting in surplus computational capacity, making leasing it out a way to generate revenue.

Grok loses momentum: monetizing idle computing resources

In the AI industry, computational power has always been a scarce resource. Major AI companies devote all efforts to expanding their computing infrastructure, not leasing it out. Within less than a month, xAI has leased computing power to both Cursor and Anthropic, raising market concerns about the health of its core AI business.

According to common logic, if the Grok model were widely adopted by the market, xAI's demand for computing resources should far exceed its current supply. The current situation is the opposite—xAIpossesses redundant computing capacity exceeding its own demand, having to lease it out for monetization. This is becoming more like the business model of specialized cloud computing providers such as CoreWeave. According to analysis by The Information, for a company positioned at the cutting edge of AI, this is not an ideal market story.

Musk’s decision to merge xAI into the SpaceX brand may also be a way to downplay the independent AI company narrative—after all, a cloud computing supplier appearing as "SpaceX’s AI product" is commercially more acceptable than being seen as an independent AI company.

SpaceX IPO on the horizon: space data centers as a new story

xAI’s transformation into a cloud computing provider presents narrative challenges for SpaceX, which is preparing for an IPO. If investors classify it as a cloud computing company, there are already more mature options in the market such as CoreWeave, Nebius, or Amazon, which would significantly discount SpaceX’s valuation logic.

To address this dilemma, Musk is vigorously promoting the concept of "space-based orbital AI data centers," describing it as a core future business direction for SpaceX. In the agreement with Anthropic, the latter stated that it is “interested in working with SpaceX to develop gigawatt-scale orbital AI infrastructure,” providing a superficial endorsement for Musk’s narrative.

However, the substantive meaning of this statement is questionable. "Interested in cooperation" itself is not a binding commercial commitment, and the wording is vague, more like a courteous prospect for the future—such statements are often the last time you hear about the subject.

Uncertain infrastructure stability, commercial deals with political clauses attached

Whether xAI can fulfill the role of a cloud computing provider also faces operational doubts. According to previous reports from The Information, xAI's Memphis data center relies on mobile gas turbines and Tesla Megapack batteries for power, and the operational stability of one site is less than that of conventionally built data centers. For enterprise customers like Anthropic or Cursor, whose core business depends on stable computing power, the reliability of data centers is crucial.

In addition, Musk warned on X this week: if Anthropic or other cloud customers' AI engage in "actions harmful to humanity"—without clear defined criteria—he would expel the relevant clients from the xAI data center. This added condition injects extra uncertainty into business partnerships and may prompt potential enterprise customers to weigh their decisions carefully before signing contracts.

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