Anthropic has agreed to pay Elon Musk's xAI roughly $1.25 billion a month through May 2029 for computing capacity at the Colossus 1 data center in Memphis.
Key Points:
- Anthropic will pay about $1.25 billion a month for Colossus 1 compute through May 2029, more than $40 billion across the full term.
- The price surfaced in SpaceX's filing with the SEC, months after Musk publicly mocked the company.
- The added capacity lets Anthropic double Claude Code limits and lift peak-hour caps for paying users.
Anthropic Reserves Musk's Colossus
The monthly rate surfaced in SpaceX's public offering filing with the Securities and Exchange Commission. The document set the figure at $1.25 billion through May 2029, with a discount for the first two months while the operator completes a planned ramp-up.
Anthropic reserved the entire Colossus 1 site, which holds more than 220,000 Nvidia GPUs and over 300 megawatts of power.
Over the full contract, the payments could top $40 billion. Either side can walk away on 90 days' notice.
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Why The Compute Deal Matters
Demand for Claude has outrun the company's ability to add servers, and the rapid growth had turned into an infrastructure squeeze. Usage caps bit hardest during morning peak hours, frustrating the paying subscribers who lean on the model for long coding sessions. It has also signed compute deals with Amazon, Google, Microsoft and Nvidia, though most of that supply arrives only later.
The Memphis capacity loosens that grip almost at once. Anthropic has even floated orbital data centers to escape Earth's power and compute limits.
Anthropic said it would double Claude Code limits for Pro, Max, Team and Enterprise users, lift peak-hour caps for Pro and Max accounts, and raise API limits for its Opus models. The scale of the strain shows in the books, where annualized revenue has climbed to about $30 billion from roughly $9 billion late in 2025. Enterprise clients paying more than $1 million a year have doubled since February to over 1,000.
Rivalry Turns To Dependence
For Musk, the deal proves xAI can sell infrastructure rather than only build Grok, and profit from running rival models even if it loses the race to build the smartest one. As one industry watcher put it, "Enemy of my enemy is a compute partner."
Months earlier, Musk had treated Anthropic as both a moral and commercial adversary. He mocked its name and dismissed its direction in public. The two sides now call compute, power and data centers, not ideology, the market's real battleground.
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