Viewpoint: xAI Cloud Computing Business May Be One of the Most Underestimated Growth Engines Within the Musk Ecosystem

BlockBeats News, June 16th, In the latest episode of the BG2 podcast, Gavin Baker stated that the xAI cloud computing business may be emerging as one of Elon Musk's most underestimated growth engines within his ecosystem.

BG2 is a tech and investment podcast hosted by Brad Gerstner and Bill Gurley, with an audience mainly from the Silicon Valley startup, venture capital, and public market investment circles. Baker is the founder and CIO of Atreides Management, a hedge fund investor with a long-standing focus on tech stocks, AI, and infrastructure investments.

Baker referenced Clark's analysis on the show, stating that the cloud computing deal between xAI and Google could generate operating profits higher than Anthropic, Meta, Google, and OpenAI, calculated per gigawatt of computing power. He also mentioned that Freda's estimate for Colossus 1 indicates that the project's internal rate of return could reach 55%.

In Baker's view, if a company can finance at a rate of 6%, 7%, or 8% and then invest in a project with an internal rate of return of around 55%, the financial logic is very straightforward. He stated that xAI may have rapidly risen from a player that was not an AI cloud services provider to around the world's fourth-largest AI hyperscaler.