Google and SpaceX are in active talks to build data centers in orbit, according to reporting from The Wall Street Journal. The deal signals a broader bet by the aerospace company that space will eventually become the cheapest location for AI compute—a claim SpaceX is now using to court investors ahead of its $1.75 trillion IPO later this year.
The timing is not accidental. SpaceX is pitching orbital data centers as a solved problem awaiting scale, even as the company acknowledges that today's costs remain substantially higher than ground-based alternatives once satellite construction and launch expenses are included in the math.
Context already exists for collaboration. SpaceX acquired xAI in February and recently struck a deal with Anthropic to use computing resources from xAI's data center in Memphis, Tennessee. That agreement includes potential future work on orbital infrastructure. Google, meanwhile, is talking to multiple rocket-launch providers and has announced Project Suncatcher, an initiative to launch prototype satellites by 2027.
The orbital data center pitch has two legs. First, the cost argument: Elon Musk has claimed that space-based centers will be cheaper to operate. Second, the regulatory argument: advocates note that orbital facilities avoid the local backlash that ground-based buildouts in the U.S. increasingly attract.
But the current math tells a different story. As TechCrunch recently reported, terrestrial data centers remain substantially cheaper than their orbital counterparts when total cost of ownership is calculated. The gap exists because the construction and launch costs for satellites are factored into the equation—costs that don't vanish as SpaceX scales, though unit economics may improve.
Google has a history with SpaceX investment; the company invested $900 million in the aerospace firm in 2015, according to regulatory filings. Neither Google nor SpaceX has publicly commented on the current talks.