SpaceX’s artificial intelligence unit has held advanced talks to lease advanced computing capabilities and servers to Microsoft. This move reveals the transformation of Elon Musk’s AI arm into a giant provider and lessor of data centers and superchips.
- Behind the scenes of summer negotiations between SpaceX and Microsoft
- The shift from model building to leasing cloud infrastructure
- Google’s landmark GPU leasing deal
- Microsoft’s computing thirst crisis and the decline of Oracle deals
- The paradox of OpenAI’s biggest backer allying with Elon Musk
- Frequently asked questions
Behind the scenes of summer negotiations between SpaceX and Microsoft
An exclusive investigative report published by the technology news platform “The Information” on Thursday, October 1, 2026, revealed that “SpaceX AI,” the artificial intelligence unit of the American aerospace and defense company SpaceX owned by billionaire Elon Musk, held intense talks and negotiations during the past summer months to discuss leasing massive computing capacity and cloud processing capabilities to Microsoft. If both parties reach a definitive, binding agreement, the American software giant will join a growing list of major companies renting servers and super-servers from Musk’s technology companies.
The report, citing sources familiar with the discussions, noted that it remains unclear what level these negotiations have currently reached, describing the talks as part of Musk’s persistent push to expand into the cloud business and leased computing infrastructure sectors. Meanwhile, officials from both companies have declined to issue any official comment thus far.
The shift from model building to leasing cloud infrastructure
The Information’s report documents a striking strategic shift in the path of SpaceX’s artificial intelligence unit, which originally emerged and evolved from the startup xAI; it is no longer limited to building and developing conversational AI models such as “Grok,” but has practically transformed into a major owner and lessor of giant data centers and cloud computing. The unit is currently re-leasing surplus and massive capacities in the equipped data centers it previously built to train its own models.
Google’s landmark GPU leasing deal
The largest known leasing deal concluded by SpaceX AI to date is the one signed with Google. A regulatory filing released last June ahead of SpaceX’s initial public offering revealed Google’s agreement to pay $920 million per month for 32 consecutive months to lease computing capacity and data centers belonging to SpaceX, according to broadcasts by CNBC.
Under the terms of that massive agreement, Google benefits from running nearly 110,000 advanced graphics processing units (GPUs) manufactured by Nvidia, alongside integrated packages of central processing units (CPUs), memory units, and technical equipment in SpaceX data centers, with payment spanning the full value from October 2026 through June 2029. Microsoft and SpaceX also already cooperate on products and software; last July, the unit launched the Grok robot as an official software add-on for Microsoft Outlook via the Microsoft app store for subscribers of both platforms.
Microsoft’s computing thirst crisis and the decline of Oracle deals
These discussions come at a time when Microsoft is searching by all possible means for solutions to its computing thirst crisis and shortage of cloud capabilities to meet the overwhelming demand for artificial intelligence services that exceeds its own available capacity. In June, Business Insider reported that Microsoft held talks to lease $3 billion worth of cloud infrastructure from Oracle, but those negotiations faltered and collapsed due to regulatory and security concerns regarding digital compliance. Other reports also discussed faltering efforts by Microsoft to lease a giant data center in Texas.
The paradox of OpenAI’s biggest backer allying with Elon Musk
These ongoing talks carry a highly significant strategic paradox in tech circles: finalizing any potential agreement would make Microsoft, the primary investor and largest backer of OpenAI, a customer and direct renter of computing services provided by Elon Musk’s companies—making him one of OpenAI’s fiercest opponents and most prominent critics of its policies and executive management in courts and public arenas.
Frequently asked questions
Question: What is the nature of the talks that took place between Microsoft and the SpaceX unit?
Answer: Negotiations focused on Microsoft leasing advanced computing capabilities, capacities, and super servers from SpaceX AI data centers.
Question: What is the size of the major comparable deal SpaceX signed with Google?
Answer: Google agreed to pay $920 million per month for 32 months to operate and lease 110,000 Nvidia graphics processors.
Question: Why is Microsoft looking for additional computing capacity from competitors?
Answer: To address computing power shortages and growing demand for artificial intelligence services following the breakdown of previous negotiations with Oracle.
