Why SpaceX is the McDonald’s of AI – Computerworld
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by Mike Elgan
Contributing Columnist
Why SpaceX is the McDonald’s of AI
opinion
Jun 26, 20267 mins
SpaceX has joined Nvidia and Apple as major companies that win — no matter which AI models fail.
Credit: Visual Karsa / Unsplash
Have you seen “The Founder”?
It’s the story of McDonald’s and how Ray Kroc (played by Michael Keaton) transformed the company from a local burger joint to a global landlord. According to the movie, Kroc’s accountant gave him the revelation: “You’re not in the burger business. You’re in the real estate business.”
When brothers Richard and Maurice McDonald transformed their San Bernardino, CA barbecue restaurant into a fast-food burger joint in 1948, their model was to make and sell their own burgers. They would succeed or fail based on making better food products than other restaurants.
By the time Kroc bought out the McDonald brothers in 1961, the new model was leasing real estate to other people, and those other people would make the food. Whether the original San Bernardino McDonald’s succeeded or failed became irrelevant to the success of the McDonald’s corporation.
SpaceX has done the same thing. Its San Bernardino location, i.e. xAI, can now succeed or fail without affecting the success of the parent company, which is SpaceX.
The company this week signed a compute lease with Reflection AI, a pre-revenue startup founded by former Google DeepMind researchers. Under the agreement, Reflection pays $150 million per month for use of the Nvidia GB300 chips housed at Colossus 2, SpaceX’s expansion facility in Memphis, TN. If the lease runs for the full term, SpaceX as a landlord stands to make around $6.3 billion. (Reflection AI has shipped open-weight models, but has no widely adopted frontier model yet, and was reportedly raising capital at a $25 billion valuation.)
Earlier this month, an S-1 filing revealed that Google agreed to pay SpaceX approximately $920 million per month for 32 months. SpaceX stands to make around $30 billion. And last month, SpaceX disclosed that xAI made a big deal with Anthropic that could bring in to SpaceX as much as $45 billion in revenue.
Regardless of whether xAI — or, for that matter, Reflection, Google, or Anthropic — succeeds or fails, SpaceX still wins.
Like McDonald’s (which developed its super efficient burger-building system in order to succeed with its San Bernardino location and ended up using that system to succeed as a landlord), SpaceX is using the Colossus infrastructure it built for xAI’s Grok to succeed as an AI landlord.
Grok might succeed, or it might fail. But SpaceX makes bank if Grok’s competitors pay their rent.
That makes Elon Musk, who is the CEO of SpaceX, the Ray Kroc of AI.
Nvidia is Mayor McCheese
Colossus originally went online in July 2024, powered by 100,000 Nvidia H100 Hopper GPUs housed in a Supermicro liquid-cooled HGX H100 chassis. The company doubled that to 200,000 GPUs within a short time and it now comprises more than 220,000 Nvidia GPUs including H100, H200, and next-generation Blackwell-class accelerators. The entire fabric runs on Nvidia’s Spectrum-X Ethernet platform, specifically the Spectrum SN5600 switch built on the Spectrum-4 ASIC.
Also: Nvidia is also heavily invested in companies that are renting compute power on Colossus. The company invests in Anthropic and Reflection AI — and, for that matter, xAI itself and, therefore, SpaceX.
Nvidia has positioned itself as the Mayor McCheese of the AI industry, collecting taxes at every node of the AI economy. It supplies the GPUs and networking fabric that every frontier lab must train on and collects hardware revenue from the winner’s rivals, even as it profits from the winner’s success.
So whether Anthropic, Google, Reflection AI, xAI, or some yet-unformed lab produces the dominant model, the computing power was bought from Nvidia and the landlord’s machine was built from Nvidia silicon.
And Apple is the Hamburglar
Apple’s AI strategy is even more brilliant than Nvidia’s.
It’s built on a three-tier routing system. When you ask Siri to do something, a built-in orchestrator in the operating system decides how complex the task is....