I keep coming back to one number. Forty-one million dollars. That's how much Anthropic pays xAI every single day for AI computer chips. Every day. I can't stop thinking about this.
SpaceX filed papers to go public on Wednesday. Tucked inside those papers was a contract. Anthropic — the company that makes the Claude chatbot — agreed to pay xAI $1.25 billion a month for computer power. The deal runs through 2029. Total price tag: more than $40 billion.
But here's what worries me. Either side can cancel the whole thing with 90 days' notice. Three months. That's it.
I'll say that again. The biggest AI deal anyone has ever signed can be killed in 90 days. A summer's worth of warning. And then $40 billion just walks out the door.
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Now you might be thinking, what does this have to do with me? I asked myself the same thing. Then I looked at the stock market.
Nvidia makes the chips that run all this AI stuff. On Wednesday night, the company reported it sold $81.6 billion worth of chips in three months. Three months. Wall Street cheered. The stock went up. And here's the part most folks miss. Nvidia is now about 8% of the entire S&P 500. One stock. One company. Eight cents of every dollar in your index fund.
One analyst said Nvidia drove roughly half of the S&P 500's gains last year. Half. From one company.
So if you have a 401(k) at Vanguard or Fidelity, and it sits in an S&P 500 fund, you own Nvidia. About $70 of it for every $1,000 you've saved. You didn't pick it. You don't follow it. But it's there.
And Nvidia's huge sales rest on contracts like the one I just told you about.
Here's the part that really gets me. The whole AI money story is a circle. Nvidia gives money to OpenAI. OpenAI signs a $300 billion deal with Oracle. Oracle buys Nvidia chips. SpaceX rents out chips to Anthropic. Anthropic uses them to build a chatbot. Around and around. Add it all up and it's more than $1 trillion in promised spending. Between maybe seven or eight companies. Trading the same money back and forth.
A short-seller named Jim Chanos looked at this and said it's "a bit odd" that the chipmakers are paying their own customers. I'd use stronger words. But "odd" is a start.
Now look at the cancel button on that Anthropic deal. 90 days. xAI is the company doing the work. xAI lost $2.4 billion in three months earlier this year. The Anthropic contract is keeping it alive. If Anthropic walks, xAI is in trouble. If xAI walks, Anthropic has to find $1.25 billion in chips somewhere else, fast. Either way, somebody gets hurt. And every retirement account that holds Nvidia feels it.
I don't think most people realize how thin this floor is. They look at their statement, see the number went up, and feel good. The number went up because of Nvidia. Nvidia went up because of contracts like this one. And this one can end with a phone call.
I get it. Markets go up. Markets go down. We've all lived through that. But this is different. This is one company, one industry, one circle of money, propping up half the gains in the biggest index fund in the world.
The contract sits at a place called Colossus. It's a data center near Memphis, Tennessee. 220,000 chips. 300 megawatts of power. Enough juice to run a small city. It's real. The building is real. The chips are real. But the money that pays for it is one signature away from disappearing.
That's the number I'd repeat to a friend at the golf course. 90 days. Forty billion dollars. Ninety days.
I'm not telling you to sell anything. I'm not telling you the market is about to crash. Nobody knows. Not me. Not the people on TV. Nobody.
But I think you deserve to know what your retirement is actually built on. It's built on a circle of companies passing money to each other. It's built on contracts that can vanish in a season. It's built on one chip company that now moves the whole market by itself.
I went to bed thinking about that Memphis data center. All those chips humming in the dark. A whole industry. A whole stock market. Holding its breath.
More on this tomorrow.
— Lauren
Editor, American Ledger
