TMTLongShort: If GPU rental rates double over the next two months and double…

Brief

TMTLongShort warns a scenario where GPU rental rates double twice by January would create very high ROIC for new capacity, driving intense credit competition and favoring infra financings with upside (converts), conditional on accelerated lab ARR. SouthernValue questions how Elon will fund ~10GW of NVDA DCs (2GW by year-end from ~1.4GW); at ~$50–60B/GW (~$500B) SpaceX ($SPCX) faces a roughly $350–400B funding gap even after expected ARR from Anthropic/Google (~$26B) and Cursor (~$10–12B).

Why it matters

TMTLongShort: If GPU rental rates double over the next two months and double again by January, ROIC on standing up capacity will be extremely high and every credit pool will fight to participate in infrastructure deals—especially if structured with upside participation (e.g., converts); this outcome requires an acceleration in lab ARR, which the author is more confident in than anything else.

Key details

SouthernValue: Elon reportedly plans ~2GW of NVDA DC capacity by year-end (from ~1.4GW) and nearly 10GW next year; at $50–60B per GW this implies ~ $500B of capex. $SPCX has ~$100B cash and generated ~$3B cash from ops in 1H26, leaving roughly a $400B funding gap. Projected ARR from Anthropic/Google (~$26B) and Cursor (~$10–12B) could lift forward ops cash to ~ $50B, but a ~ $350B gap remains, making NVDA customer financing likely.

Great analysis.

One variable that should be focused on more is the psychological effect on market participants if GPU rental rates double over the next two months and then double again by January.

In that state of the world the ROIC on standing up capacity will be wild and every credit pool is going to be fighting to participate in infra deals.

Particularly if you structure them with upside participation e.g. converts.

That only happens if there is an accel in lab ARR….Which I am more confident in than anything else.

SouthernValue (@SouthernValue95)

Not easy to understand how Elon will afford to build 10GW of NVDA DCs by next year.

Elon says he will have 2GW of DC capacity by the end of this year (from ~1.4GW today), and close to 10GW next year, all NVDA. At $50-60B/GW, this would = ~$500B of capex. Maybe more since Elon says he will build 15GW of utility power.

$SPCX has $100B of cash, but generated just $3B of cash from ops in 1H26. Leaving a ~$400B funding gap.

Cash from ops will grow in 2H26 as Anthropic and Google pay ~$26B ARR for spot GPU deals, but that is at risk of being churned off in early 2027 (esp by GOOG as much cheaper internal capacity comes online).

Cursor will also be added in 2H, maybe $10-12B ARR by year end, but hard to know how much cash it will generate.

Assuming the 600MW ramped in 2H is monetized at ~$20-30B/GW, maybe $SPCX exits 2026 with capacity to generate ~$50B of cash from ops on a forward basis.

Still a ~$350B funding gap.

I have to imagine $NVDA customer financing will come into play here.

— https://nitter.net/SouthernValue95/status/2084800320140378130#m