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Pentagon Seeks Billions in AI Computing Power From SpaceX

Pentagon Seeks Billions in AI Computing Power From SpaceX

CoineditionCoinedition2026/07/18 14:42
By:Coinedition

The United States Department of Defense is in active negotiations with SpaceX to purchase data center capacity for running artificial intelligence models, in a deal the Wall Street Journal reported could reach several billion dollars in value.

The talks would extend an existing commercial and defence relationship between the Pentagon and Elon Musk’s rocket and satellite company, which has rapidly transformed itself into one of the largest AI infrastructure providers in the country through its Colossus data centre project.

The scale of SpaceX’s computing business has grown faster than most of the industry anticipated. The company has already locked in three major AI clients paying a combined $27.8 billion annually in computing fees.

Anthropic committed to $1.25 billion per month to access the full capacity of the Colossus 1 facility in Memphis, Tennessee, after striking a deal in May. Google signed a multi-year cloud services agreement in June worth approximately $920 million monthly, covering access to around 110,000 Nvidia chips and related infrastructure. Reflection AI contributes a further $150 million per month.

If the Pentagon deal closes, it would bring the US military into a client base already populated by some of the most consequential AI developers in the world.

Like many large institutions, the Defence Department is actively expanding its cloud computing capacity to support intelligence operations and military AI applications. The Pentagon’s interest in SpaceX reflects a broader push to secure sovereign computing infrastructure rather than rely entirely on commercial cloud providers.

Amazon Web Services announced late last year it would invest up to $50 billion in AI and supercomputing capacity for US government clients. SpaceX’s entry into the same market signals growing competition for defence computing contracts, with the company reportedly discussing plans to price computing capacity more aggressively than established neocloud rivals such as CoreWeave.

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SpaceX’s computing infrastructure is built around xAI’s data centre footprint. The Memphis facility is already operational and the company is currently expanding into Mississippi. The strategic bet is on owning and operating physical infrastructure at scale rather than competing on model capability, a position that leaves SpaceX positioned to sell capacity to whoever needs the most compute, whether that is a private AI lab or the US military.

Negotiations are ongoing and could still fall through, according to the Wall Street Journal. Neither SpaceX nor the Pentagon responded to press requests for comment at the time of publication.

SpaceX shares closed down 5.43% at $123.99 on Friday, below the company’s recent IPO price. Despite short-term pressure, Wall Street analysts maintain a positive outlook, with 29 analysts covering the stock, an average target price of $243.81, and a high-end target of $800.

Related: Will BTC Skyrocket to the Moon as SpaceX Tests Transfers?

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