Google parent Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) is moving to secure short-term AI compute capacity through a major cloud agreement with SpaceX.
BNP Paribas analyst Nick Jones said this reinforces Google’s commitment to maintaining AI leadership despite capacity constraints.
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Jones Says Google Is Buying Bridge AI Capacity
Jones said Alphabet entered a cloud service agreement with SpaceX to pay $920 million per month for 200 megawatts of capacity from October 2026 through June 2029.
He said the capacity includes about 110,000 NVIDIA Corp (NASDAQ:NVDA) GPUs, along with CPUs, memory, and related components.
Jones said the deal translates to a run rate of more than $50 billion a year per gigawatt of compute capacity.
He noted Google can terminate the agreement or reduce monthly fees if SpaceX fails to provide the committed GPU access by the deadline, and either side can terminate the agreement after Dec. 31, 2026, with 90 days’ notice.
BNP Sees Strategic Value Despite Capital Concerns
Jones said the agreement supports BNP Paribas’ view that AI compute demand remains strong and can generate attractive returns on invested capital.
He said Alphabet’s 6.1% stake in SpaceX, worth about $106 billion, also makes the deal self-serving beyond capacity access.
Jones said the size of the agreement may raise near-term capital intensity concerns. Still, he viewed the move as strategically prudent given Google Cloud’s backlog growth, rising AI adoption, and long-term revenue opportunities across Search, Cloud, and AI-driven products.
BNP Paribas rates Alphabet Outperform with a $420 price forecast.
GOOG Price Action: Alphabet shares were down 1.45% at $355.92 at the time of publication on Tuesday, according to Benzinga Pro data.
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