SpaceX Overhauls AI Data Centers to Meet Google Deadline

Space Exploration Technologies Corp. is racing to resolve engineering and reliability failures at its AI data centers in Tennessee and Mississippi to meet a September 30 deadline for a compute deal with Google. The agreement requires SpaceX to provide access to approximately 110,000 Nvidia GPUs in exchange for $920 million per month at full capacity, with payments starting in October 2026.

Reliability issues included facilities operating without backup power and cooling for months, with the Tennessee Macrohand facility relying on over 100 mobile chillers. In response, SpaceX is overhauling its buildout process to install backup systems and cooling equipment before facilities go live, rather than adding safeguards after the fact. The company has reshuffled leadership, replacing departing executives with leaders from its rocket and Starlink operations, and delayed new projects in Texas to focus on its Memphis hub.

To bypass supply chain constraints that left Mississippi facilities using temporary gas turbines longer than expected, SpaceX is developing an in-house foundry in Texas to manufacture turbine blades. While the $920 million monthly bill represents a substantial cost headwind for Alphabet Inc., strong demand for Google Cloud is expected to mitigate long-term risks. Goldman Sachs projects that SpaceX's AI-related revenue could reach $322 billion by 2030.