Hot take on Elon’s surprise decision to rent 300 megawatts of compute to Anthropic:

1. It’s a tacit concession that xAI is not all that close to AGI (despite what he suggested last year).

2. It’s more evidence that pure scaling doesn’t get you to AGI.

3. If xAI turns out to be just another cloud company, in an increasingly crowded market, SpaceX investors very likely overpaid.

4. The very fact that xAI *has* an enough of oversupply to sell some to a big competitors doesn’t bode well for hyperscalers. We may very quickly find ourselves in a world where supply outstrips demands and prices drop precipitously.

5. Customers win but …

6. Companies like Amazon, Google, Meta, Microsoft and Oracle could all take a hit, especially given what they have done to their cash flows to build up their cloud compute resources.