SpaceX plans to provide AI computing power to the Pentagon, with the contract size potentially reaching several billion dollars.

According to media reports on Friday, SpaceX is in negotiations with the U.S. Department of Defense to provide data center computing power, proposing to provide the department with data center computing power worth billions of dollars to run AI models. This move will further deepen the cooperation between Elon Musk's company and the Pentagon. Insiders revealed that the two sides are discussing an agreement: SpaceX will provide computing power to the Department of Defense, with the contract amount potentially reaching billions of dollars. However, the negotiations are still ongoing, and there is a possibility that the final agreement may fall through. It is reported that SpaceX has signed similar computing power supply agreements with Anthropic and Alphabet Inc. Class C in recent months, and the company is currently planning to significantly expand its cloud computing business. In recent weeks, SpaceX employees have discussed plans to compete more directly with existing suppliers like CoreWeave by offering computing power to AI customers at lower prices. If an agreement is reached with the Pentagon, this will be another important cooperation between SpaceX and the U.S. Department of Defense. Currently, the Department of Defense relies on SpaceX for rocket launch services, as well as satellite communication and missile tracking capabilities. However, some U.S. national security officials have expressed concerns about the Pentagon's high level of reliance on companies owned by Musk. In addition, Musk's provision of significant funding to the Trump campaign during the 2024 U.S. presidential election has raised questions about potential conflicts of interest. Like many large companies, the Department of Defense is currently competing to acquire computing resources to support intelligence agencies, including the National Security Agency (NSA), and military personnel using AI technology in their daily tasks. As one of the Pentagon's major computing power suppliers, Amazon.com, Inc. is investing $500 billion to expand its computing capacity for government agencies, with a focus on serving the Department of Defense. Microsoft Corporation, Alphabet, and Oracle Corporation are also major cloud service providers for the Department of Defense. Pentagon officials have previously stated that as the military accelerates the adoption of AI technology, they hope to reduce their reliance on individual tech companies. Recently, the Department of Defense has approved a group of companies, including SpaceX, Amazon.com, Inc., Alphabet Inc. Class C, Microsoft Corporation, and Oracle Corporation, to allow their AI models and related technologies to be used in classified environments. SpaceX recently acquired Musk's xAI company and went public, integrating Grok AI models and data centers into its business. In order to catch up in the AI race, Musk's company rapidly built a large-scale data center in Memphis, Tennessee. According to public documents from SpaceX, Musk has stated that the company's speed in building data centers exceeds that of its competitors, while costs are also lower. As part of its strategy to reduce energy costs, SpaceX has installed gas turbines on-site at its data centers for power generation, but this move has led to lawsuits and allegations of environmental regulation violations. In addition, SpaceX has also proposed deploying data centers in space to investors. Analysts say that renting computing power, as opposed to directly selling the Grok model to compete with other AI tools, has proven to bring higher short-term returns.