The Anthropic xAI Deal Is An Admission Of Failure
The chart shows US business paid AI subscription growth. Musk's AI company is in last place. He shoved xAI into SpaceX in order to siphon off SpaceX cash flow and IPO proceeds to finance his struggling venture. On its own, no one would lend to xAI given its third tier position in the AI service and its $1 billion per month cash burn. Now Anthropic is leasing a huge chunk of xAI data center capacity to estimate its models. Supposedly worth about $1.25 billion per month. I say supposedly because contracts can vary from rock solid to as soft as jello. Indeed, some industry contracts are really just letters of intent, non-binding expressions of customer interest. In this case both sides can cancel the agreement with only 90 days notice. Again, the Musk cheerleaders are prematurely celebrating. What this deal implies is that there's very little demand for xAI's models. So just as X pivoted from social media platform to AI, it is now pivoting to the AI data center b...