AI Rivals Anthropic, xAI Ink Major Data Center Agreement

A Partnership of Rivals

In a surprising alliance, AI firm Anthropic announced it will acquire all computing capacity from a data center operated by its competitor, Elon Musk's xAI. The deal gives Anthropic full access to the Colossus 1 facility in Memphis, which houses over 220,000 Nvidia chips and provides 300 megawatts of power.

Both companies confirmed the arrangement on Wednesday. While Anthropic stated it would take 100% of the capacity within the next month, xAI acknowledged a deal without specifying the exact amount. In a social media post, Musk noted the agreement followed a recent meeting with the Anthropic team.

The agreement allows xAI to continue training its own models at its second Memphis data center, known as Macrohard. The companies also noted that Anthropic has shown interest in a future collaboration with SpaceX to establish data centers in space, hinting at deeper potential ties.

Explosive Growth Fuels Compute Demand

Anthropic's move is a direct response to staggering growth that has strained its resources. CEO Dario Amodei revealed Wednesday that the company was caught off guard by an extraordinary 80-fold surge in revenue and customer usage during the first quarter of the year.

Speaking at the Code With Claude developer conference, Amodei stated, “We tried to plan very well for a world of 10x growth per year. That is the reason we have had difficulties with compute.” This exponential increase saw Anthropic's annualized revenue skyrocket from under $1 billion at the end of 2024 to an estimated $30 billion by early April 2026.

This unprecedented demand has created a critical need for more processing power. The xAI deal complements Anthropic's recent cloud contracts with Amazon and Google, which together will supply a combined 10 gigawatts of compute, as the company scrambles to keep pace with its own success.

An Industry-Wide Scramble

The intense pressure for computing resources is a challenge across the tech industry, forcing unusual strategies and highlighting complex relationships between AI leaders. Uber, for instance, recently acknowledged it had to “re-up our investment” in AI asourceser underestimating its impact and maxing out its 2026 AI budget early.

The intricate web of connections in the AI world was further highlighted by court testimony this week. Shivon Zilis, a longtime Musk ally, testified that Elon Musk had once offered OpenAI CEO Sam Altman a seat on Tesla’s board. The offer was part of early discussions about potentially merging the then-non-profit OpenAI into Tesla to compete with Google's DeepMind.

This historical detail, emerging from Musk's ongoing lawsuit against OpenAI, illustrates the fluid nature of alliances and rivalries in the sector. The latest Anthropic-xAI pact demonstrates that in the current landscape, the immediate, pragmatic need for compute infrastructure can override even direct competition.