Google and SpaceX are in discussions to deploy orbital data centres in space.

The proposed partnership comes as SpaceX prepares for its anticipated $1.75 trillion IPO later this year, pitching investors on the vision that space-based data centres could become the most cost-effective location for AI computing in the coming years, according to The Wall Street Journal, citing sources familiar with the matter.

The development also comes on the heels of SpaceX’s agreement last week with Anthropic to tap computing capacity from xAI’s data centre in Memphis, Tennessee, with the possibility of collaborating on orbital facilities in the future.

Google is also said to be in discussions with other rocket-launch providers. The company plans to send prototype satellites into orbit by 2027 under an initiative known as Project Suncatcher, unveiled late last year.

Elon Musk has promoted the concept of orbital data centres, arguing they would be cheaper to operate.

Supporters say space-based facilities could also avoid the local opposition that often greets large data centre projects in the United States.

However, recent reporting indicates that once satellite manufacturing and launch expenses are included, today’s ground-based data centres remain significantly more cost-effective than those in orbit.