According to sources familiar with the situation, The Wall Street Journal reports that Google and SpaceX are negotiating to establish orbital data centers in space.

This potential agreement emerges as SpaceX prepares for its $1.75 trillion IPO later this year, convincing investors that in a few years, space will become the most economical location for AI computing facilities. It also follows last week’s collaboration between Anthropic and SpaceX to utilize computing capabilities from xAI’s data center in Memphis, Tennessee, with possibilities for future partnerships on orbital data centers. (SpaceX took over xAI in February.)

Reports indicate that Google is also engaging with other rocket launch firms. The company intends to deploy prototype satellites by 2027 as part of an effort named Project Suncatcher, which was revealed late last year.

Elon Musk has generated excitement around orbital data centers, asserting they are more cost-effective to manage. Proponents also note that they avoid the local opposition that ground-based developments in the U.S. face. Nevertheless, as TechCrunch recently noted, current terrestrial data centers remain significantly less expensive than those in orbit when accounting for the costs associated with construction and launching satellites.

In 2015, Google made a $900 million investment in SpaceX, as per regulatory documents.

TechCrunch has contacted Google and SpaceX for their responses.