Google and SpaceX in talks to put data centers in orbit

When terrestrial power grids run dry, tech giants start looking straight up.

Google is currently in talks with SpaceX to explore launching data centers into orbit, according to sources cited by The Wall Street Journal. While putting AI clusters in space sounds like a wild sci-fi premise, the two companies already have history: regulatory filings show Google invested $900 million in SpaceX back in 2015.

A $1.75 trillion IPO narrative

The timing makes a lot of sense for Elon Musk. SpaceX is gearing up for a massive $1.75 trillion IPO later this year, pitching Wall Street on the promise that low Earth orbit will become the cheapest place to run AI compute within the next few years.

Musk is moving fast to line up high-profile cloud partners. Just last week, Anthropic struck a deal with SpaceX to tap computing power from xAI’s Memphis supercluster, with the door left open for future orbital collaboration. SpaceX officially acquired xAI in February.

Google is keeping its options open. In addition to talks with SpaceX, the company is reportedly negotiating with other launch providers. Under its Project Suncatcher initiative announced late last year, Google already plans to launch prototype satellites by 2027 to test space-based operations.

Free sunlight versus rocket economics

Proponents point out that orbital server farms enjoy round-the-clock solar energy and completely bypass the intense local pushback and zoning battles plaguing ground data centers across the U.S.

However, the math is still brutal. As TechCrunch recently noted, today’s ground facilities remain far cheaper than anything in orbit once you tally up the extreme costs of satellite manufacturing, launch operations, and space-hardening hardware.

Why it matters

We see this talk less as an imminent cloud rollout and more as a stress test for how hyperscalers plan to survive the looming terrestrial energy crunch.

For everyday developers and users, orbital servers will not change anything anytime soon. Latency constraints alone mean space compute cannot handle real-time chat or interactive apps in the near future; it is far better suited for asynchronous model training or specialized data pipelines.

For the broader industry, it shows where the battleground is shifting. With both Anthropic and Google at the table, space-based compute is shifting from an eccentric Musk ambition into a hedge that traditional cloud providers feel compelled to explore.

That said, the economics look heavily tilted toward SpaceX’s upcoming IPO hype. Orbit offers unlimited cooling space and solar power, but zero on-site maintenance. Until launch costs drop by another order of magnitude, orbital data centers remain a wildly expensive insurance policy rather than a viable near-term compute platform.