Twice is coincidence. The third time it's enemy action'.”
—Auric Goldfinger, Goldfinger
First up, the New York Times, June 5:
SpaceX Has $30 Billion Deal to Provide Google With A.I. Computing Power
Elon Musk’s rocket company said Google would pay it $920 million a month, as it prepared for its initial public offering.
And from The Register, July 2:
SoftBank enters the rent-a-GPU race as America looks for support for AI training
Japanese giant needs to find some use for that 10 GW US server farm it is building
SoftBank is set to get into the neocloud business in America, providing resources to hyperscalers and other customers seeking a platform on which to carry out their AI training.
The Japan-based tech investment giant says it will establish a new company called SB Neo, Inc to operate its neocloud business in the US, and expects to start operations in fiscal 2027 (ending March 31, 2028).
In actual fact, ownership of the nascent biz will be split, with 51 percent in the hands of SoftBank Corp, while 49 percent is owned by SoftBank Group Corp. SB Neo will be a consolidated subsidiary of SoftBank Corp, which is itself 40 percent owned by SoftBank Group Corp. All perfectly clear?
And from SemiAnalysis, also July 2:
Meta Compute: Everyone Wants To Be A Neocloud
....With Bloomberg headlines suggesting Meta could become a Neocloud, the market’s reaction was immediate: aggressive sell-off of Neoclouds like Coreweave & Nebius, and debates of “overcapacity” coming back. Let’s set the record straight – we believe that both takes are erroneous and that Meta’s datacenter & compute procurement will accelerate, not slow down. Capex in 2027 will be shockingly high. In just the first six months of the year, Meta has contracted over 5GW of capacity across Cloud & Colo, and that doesn’t even include all their accelerating self-build activity. Everything is computer and everything is a neocloud....
I don't like disagreeing with SemiAnalysis so I'll just say this move among big, big companies to lease out giant chunks of their compute, and axiomatically taking the leases onto their balance sheets as an asset is enough to drive me back to Graham & Dodd, and in the case of SoftBank to Howard Schilit's Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports.
As we await developments a flashback to June 2019:
"Something is not quite right with SoftBank"Sam Insull's story is interesting and possibly instructive. He was a Chicago guy.
Additionally, SoftBank investee WeWork was out looking for a few billion dollar line of credit.
Shades of another disruptor, Sam Insull, leverage at the holding company level, leverage at the operating company level, leverage all the way down...
