SpaceX is in talks to sell computing power to the U.S. military, according to a Wall Street Journal report cited by Reuters. The discussions center on a multi-billion-dollar agreement to supply the Department of Defense with data-center capacity for running advanced artificial intelligence models.
At the heart of the potential deal is Colossus, the supercomputer built by xAI, Elon Musk's AI company. According to the International Business Times, the Pentagon is exploring a partnership that would give it access to Colossus, which the outlet frames as the department's possible next major AI asset.
The move signals a broader ambition beyond a single government contract. According to the report, SpaceX employees have discussed plans to compete more directly with so-called "neocloud" firms such as CoreWeave by selling computing capacity to AI customers at lower prices. In other words, SpaceX wants to become a player in the business of renting out raw AI horsepower.
Investors took notice. According to EconoTimes, SpaceX briefly recovered some of its losses on Friday after the Wall Street Journal reported the negotiations, and the news added pressure on rival CoreWeave's pricing strategy.
None of the parties has confirmed a finished agreement; the reporting describes talks that are still under way.
Why it matters: If the deal comes together, it would deepen the ties between Musk's companies and the U.S. government while pushing SpaceX into the fast-growing, high-stakes market for AI computing power — a resource that is quickly becoming as strategically valuable as fuel or bandwidth.