SpaceX is in talks with the U.S. Department of Defense to provide data centre capacity to run AI models, the Wall Street Journal reported on Thursday, citing people familiar with the matter.

The amount is several billion dollars. The talks are ongoing and could fall through, the WSJ said.

SpaceX has been accelerating expansion of its cloud computing business in recent months, including by signing similar deals with Anthropic and Google. In recent weeks, SpaceX employees have discussed offering capacity to AI customers at lower prices to compete directly with established providers such as CoreWeave, people familiar with the matter said.

The Department of Defense has moved aggressively to secure cloud computing infrastructure that can support the National Security Agency and units that use AI. Microsoft, Google and Oracle are also major cloud suppliers to the department.

Amid this, the department has said it wants to reduce reliance on specific technology companies as the military adopts AI. More recently, it approved SpaceX, Amazon, Google, Microsoft and Oracle as a group of companies whose AI models and technologies can be used in classified environments.

The department also asked Congress for a $30 billion budget needed for a new initiative called AI Arsenal that focuses on securing advanced AI chips.

The department has relied on SpaceX for rocket launches and for operating communications and missile-tracking satellites. Some national security officials have concerns that the department relies too heavily on Musk services. The fact that Musk made large donations to President Trump's 2024 election campaign is also fuelling conflict-of-interest controversy, the WSJ said.

SpaceX recently acquired xAI and folded the Grok AI model and data centre business into its operations. In the short term, renting out computing capacity could be more attractive for revenue than selling the Grok model. Deals with Anthropic, Google and ReflectionAI could lead to annual revenue in the tens of billions of dollars, the WSJ said.