Its very simple, xAI needs money to win the AI race, so best option is to attach to Elon’s moneybank (spacex) to get cash without dilution
Off on a tangent here but I'd love for anyone to seriously explain how they believe the "AI race" is economically winnable in any meaningful way.
Like what is the believed inflection point that changes us from the current situation (where all of the state-of-the-art models are roughly equal if you squint, and the open models are only like one release cycle behind) to one where someone achieves a clear advantage that won't be reproduced by everyone else in the "race" virtually immediately.
Office? Dead. Box? Dead. DropBox? Dead. And so on. They'll move on anything that touches users (from productivity software to storage). You're not going to pay $20-$30 for GPT and then pay for DropBox too, OpenAI will just do an Amazon Prime maneuver and stack more onto what you get to try to kill everyone else.
Google of course has a huge lead on this move already with their various prominent apps.
Office's moat is much bigger (and its competition already free). "New vibe coded features every week" isn't an obvious reason for Office users to switch away from the platform their financial models and all their clients rely on to a new upstart software suite
At the same time, it'd give the country controlling it so much economic, political and military power that it becomes impossible to challenge.
I find that all to be a bit of a stretch, but I think that's roughly what people talking about "the AI race" have in mind.
Because the first company to have a full functioning AGI will most likely be the most valuable in the world. So it is worth all the effort to be the first.
This may be what they are going for, but there are two effectively religious beliefs with this line of thinking, IMO.
The first is that LLMs lead to AGI.
The second is that even if the first did turn out to be true that they wouldn't all stumble into AGI at the same time, which given how relatively lockstep all of the models have been for the past couple of years seems far more likely to me than any single company having a breakthrough the others don't immediately reproduce.
Everyone is spending crazy amounts of money in the hopes that the competition will tap out because they can't afford it anymore.
Then they can cool down on their spending and increase prices to a sustainable level because they have an effective monopoly.
Data centers in space are the same kind of justification imo.
The "put 500 to 1000 TW/year of AI satellites into deep space" for example, that's as far ahead of the entire planet Earth today as the entire planet Earth today is from specifically just Europe right after the fall of Rome. Multiplicatively, not additively.
There's no reason to expect any current business (or nation, or any given asset) to survive that kind of transition intact.
Of course that didn't work out with this specific acquisition, but overall it's at least a somewhat reasonable idea.
I keep seeing that term, but if it does not mean "AI arms race" or "AI surveillance race", what does it mean?
Those are the only explanations that I have found, and neither is any race that I would like to see anyone win.
But when they say, "Win the AI race," they mean, "Build the machine god first." Make of this what you will.
They're losing money now because they're making massive bets on future capacity needs. If those bets are wrong, they're going to be in very big trouble when demand levels off lower than expected. But that's not the same as demand being zero.
Stop this trope please. We (1) don't really know what their margins are and (2) because of the hard tie-in to GPU costs/maintenance we don't know (yet) what the useful life (and therefore associated OPEX) is of GPUs.
> If they stopped training and building out future capacity they would already be raking in cash.
That's like saying "if car companies stopped researching how to make their cars more efficient, safer, more reliable they'd be more profitable"
Imo I would be extremely angry if I owned any spacex equity. At least nvidia might be selling to china in the short term... what's the upside for spacex?
I don't know of an instance of this happening successfully.
Amazon can ship it to a location near you.
None of the big-box stores have created a monopoly.
Amazon unseated behemoth Walmart with a mere $300,000 startup capital.
Musk founded his empire with $28,000.
Taxi apps—uber & lyft. They moved into an area (often illegally); spent a shit-ton of money to displace local legal taxis, and then jacked up prices when the competition ceased to exist. Now I can't hail a taxi anymore if I don't have a phone.
> None of the big-box stores have created a monopoly.
They do in my region. Mom and pop shops are gone.
> Amazon unseated behemoth Walmart with a mere $300,000 startup capital.
We've been over this—they occupy different markets.
> Musk founded his empire with $28,000.
Sure. It would have been far easier to do with more capital.
Amazon and Walmart do compete with each other. Neither has a monopoly. Nor have I noticed jacked up prices from them.
Starship development is consuming billions. F9 & Starlink are probably profitable ?
I’d say this is more shifting of the future burden of xAI to one of his companies he knows will be a hit stonk when it goes public, where enthusiasm is unlikely to be dampened by another massive cash drain on the books.