Elon Musk’s stake in the AI race is no longer Grok. It’s power and chips. He leased the Colossus 1 data center - 220,000 Nvidia GPUs and 300 megawatts of power - to competitor Anthropic. This move positions xAI as a direct infrastructure rival to AWS and Azure, converting electrons to tokens faster than anyone else can.
On The AI Daily Brief, Nathaniel Whittemore framed this as a retreat from the model-first competition. Musk is leaning into his core strengths: scaling manufacturing and solving physical supply chain bottlenecks. The Terrafab project in Texas is now estimated at up to $119 billion. BlackRock’s Larry Fink argues the market faces supply shortages, not a bubble, validating these massive capital expenditures.
“By leasing the Colossus data center to Anthropic, Musk is acknowledging that his primary leverage lies in hardware and power rather than the Grok model.”
- Nathaniel Whittemore, The AI Daily Brief
David Sacks on All-In cited Anthropic’s revenue growth as unprecedented - tripling from roughly $10B ARR to $30B ARR from January to March, then accelerating to $44B ARR in April. He argues the company is on track to become the most powerful monopoly in history. Sacks compares Anthropic’s safety-focused branding to a hypothetical “Safe Oil” strategy by John D. Rockefeller, suggesting it’s a form of regulatory capture.
The deal provides billions in immediate revenue to fund Musk’s own model training. It also signals that Anthropic and OpenAI’s explosive growth is entirely a function of compute supply, not end-user demand. Google DeepMind's Demis Hassabis admits his lab is compute-constrained, choosing which frontier models to build based on hardware scarcity.
“Anthropic grows at a rate of 10x per year. David Sacks argues the company is on track to become the most powerful monopoly in history.”
- David Sacks, All-In
This infrastructure pivot coincides with a White House push toward pre-release model vetting, catalyzed by models like GPT 5.5 and Claude Mythos discovering system vulnerabilities the government can't detect. Silicon Valley leaders like Sacks dismiss it as a federal power grab, arguing the industry already self-polices. The tension is whether gatekeeping will cause the U.S. to fall behind geopolitically.
The race is now vertical. Google’s $109.9 billion quarter proves owning the entire stack - from TPUs to data centers - creates a moat search alone never could. Musk is building his own stack, not trying to beat OpenAI at its game.
