The contract has an exit clause, either side can terminate the agreement with 90 days notice. I do not expect this contract to last the full 3-year term.
And this deal protects Google's investment. Google owns close to $100 billion of SpaceX stock. This deal increases SpaceX's revenue by 30%, and pushes SpaceX into profitability. With this deal, SpaceX is eligible for S&P inclusion. Assuming $6-7 trillion in S&P 500 tracked funds, and a 1% SpaceX weight after a year, this is $600-700 billion in demand for SpaceX stock. It means Google now has someone to unload its position off to. This play directly protects Google's investments.
SpaceX announced $26B/year in compute deals with Anthropic and Google in the past week. The margins on both deals are incredibly high, Google is paying around $11.75/hour per GPU. Infrastructure costs are far below that, SpaceX likely has 70-90% margins. These two deals are around $20B/year profit. In the preliminary S-1, SpaceX reported a $5B loss in 2025. Combining these numbers, that's a $15B profit, assuming losses are constant. Likely expenditures will increase, but even if losses double, that's a very healthy $10B profit.
Where did you get your costs and margins from? I have direct experience in this business and I can tell you they’re usually not that high. These machines are also not cheap to power, cool, and house.
As a comparison point, CoreWeave’s most recently reported operating margin was 16%.
And this deal protects Google's investment. Google owns close to $100 billion of SpaceX stock. This deal increases SpaceX's revenue by 30%, and pushes SpaceX into profitability. With this deal, SpaceX is eligible for S&P inclusion. Assuming $6-7 trillion in S&P 500 tracked funds, and a 1% SpaceX weight after a year, this is $600-700 billion in demand for SpaceX stock. It means Google now has someone to unload its position off to. This play directly protects Google's investments.