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Anthropic and xAI announced a big partnership<\/a> this week, with Anthropic buying all the compute capacity at xAI\u2019s Colossus 1 data center in Tennessee.<\/p>\n On the latest episode of TechCrunch\u2019s Equity podcast<\/a>, Kirsten Korosec, Sean O\u2019Kane, and I discussed what the deal might mean for xAI\u2019s parent company SpaceX, as SpaceX prepares to go public and apparently plans to dissolve xAI<\/a> as a separate organization.<\/p>\n Kirsten did her best to offer \u201ca positive view\u201d on the partnership \u2014 after all, it\u2019s a new way for xAI to make money. But she also noted that this also suggests xAI isn\u2019t doing much when it comes to training its own frontier AI models, and it\u2019s harder for the company to position itself as a \u201cforward-looking, innovative\u201d business when that\u2019s the case.<\/p>\n Then Sean asked: \u201cWhy be positive when you can be cynical?\u201d In his view, this seems like \u201ca major heat check before the IPO.\u201d Yes, becoming a neocloud<\/a> might be \u201ca more believable business in the near term,\u201d but it\u2019s less likely to get outside investors excited in the long term. (And then there\u2019s the environmental lawsuit<\/a> that xAI is facing over Colossus 1.)<\/p>\n Keep reading for a preview of our conversation, edited for length and clarity.<\/p>\n Sean O\u2019Kane:<\/strong> I always love a surprise, especially when everybody\u2019s eyes [are] on another ball, a major trial<\/a> that\u2019s happening. Seemingly out of nowhere this week, SpaceX and therefore its AI subsidiary xAI \u2014 which apparently no longer exists now, or is imminently not about to exist, which we can get to \u2014 struck a deal with Anthropic.<\/p>\n Basically, the real version of the deal is that Anthropic\u2019s essentially taking over all of the compute at the data center known as Colossus 1 in Memphis, Tennessee, to focus on Anthropic\u2019s more enterprise-focused AI products. There\u2019s been a lot of reporting about how [Anthropic\u2019s] been looking for more compute [\u2026] and it seems like an escape valve for them to be able to strike this deal and get access to all this compute.<\/p>\n Techcrunch event<\/p>\n \n\t\t\t\t\t\t\t\t\tSan Francisco, CA<\/span> In the near term, for xAI and for SpaceX, yes, they are a neocloud now, in the sense that they had to do something with all this compute that they were building, because it certainly seems like they were not going to need it for Grok \u2014 which, outside of X, is not burning up the world as far as becoming the new hot consumer chat bot.<\/p>\n Kirsten Korosec:<\/strong> And we should say that in terms of what a neocloud is, for those who don\u2019t know, this is the idea of buying GPUs from Nvidia and the like, and renting those out as opposed to using those for their own AI, training their own AI models.<\/p>\n So this is a different kind of business, and the point that our AI editor, Russell Brandom, makes<\/a> is that a lot of companies are building out data centers, but if given a choice between, do they rent them out [or using them to train their own models], they are still prioritizing using this compute for their own internal AI model training. I think that\u2019s an important point and one that suggests that maybe xAI isn\u2019t doing so much on the AI model training [side]<\/p>\n Anthony Ha:<\/strong> Right, and as Sean was alluding to, most people would not necessarily think of Grok as \u2014 not only that it\u2019s known for some pretty unpleasant, if not downright illegal<\/a>, content, but also it\u2019s not necessarily super cutting edge. Especially if we start talking about enterprise AI, which I know we\u2019re gonna be getting into later in this episode, you don\u2019t hear a lot about people using Grok for work-critical tasks.\u00a0<\/p>\n And so the question becomes: How can xAI actually make money? And apparently just selling the infrastructure could be one of the main ways to do it.<\/p>\n Kirsten:<\/strong> And you could take a positive view on that, right? They figured out a way to make money. But I think that when you are positioning your company \u2014 in this case, SpaceX-slash-xAI \u2014 as a forward-looking, innovative company, that\u2019s tougher to sell if you are simply just renting out your GPUs and not using them for that innovation.<\/p>\n Sean:<\/strong> But why be positive when you can be cynical? Which is to say that this seems like a major heat check before the IPO that we\u2019re about to see get rammed into the markets with SpaceX.<\/p>\n Anthony, you mentioned not only is Grok not being used for big enterprise tasks, there\u2019s been reporting that xAI employees were using other models<\/a>, they weren\u2019t even using [Grok] internally, and that caused this big shakeup inside of xAI, post acquisition from SpaceX<\/a>, that involved essentially all the co-founders leaving other than Elon Musk<\/a>, [and] him basically saying he\u2019s starting from scratch on xAI, despite the fact that SpaceX paid $250 billion for it in the run up to this mega-IPO.\u00a0<\/p>\n And now he\u2019s saying that they\u2019re going to dissolve xAI<\/a> as a separate entity inside SpaceX altogether. He\u2019s starting to call the whole thing SpaceXAI, because this man loves nothing but to ruin a brand that has some value to it \u2014 see Twitter.<\/p>\n This may be a more believable business in the near term, and so on some level, I could see this being maybe more attractive to investors come IPO time, because it\u2019s like a bit more reliable and certainly more real than them being a frontier lab developer. But it\u2019s also not the kind of business that\u2019s going to draw the same \u2014 at least, in a normal environment \u2014 outside investment that we\u2019re seeing go into all the frontier labs.<\/p>\n That\u2019s maybe one of the biggest tension points we\u2019ve seen develop during this IPO process.<\/p>\n<\/div>\n When you purchase through links in our articles, we may earn a small commission<\/a>. This doesn\u2019t affect our editorial independence.<\/em><\/p>\n
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\n\t\t\t\t\t\t\t\t\t\t\t\t\tOctober 13-15, 2026<\/span>\n\t\t\t\t\t\t\t<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>\n