Radio Free Mobile Founder Richard Windsor: xAI Halts Grok 5 Training to Rent Out Compute; Spot Premium Expected to Fade by 2027
Independent technology analyst Richard Windsor explains the logic behind xAI's decision to shift data center capacity from internal training to short-term rental: spot market premiums (estimated at $30 billion to $50 billion per GW) make rental returns far exceed expected model training benefits. However, he notes that new cloud providers structurally cannot benefit from this premium due to financing models requiring multi-year contracts, and that high prices themselves will attract supply, pushing prices back down to approximately $20 billion per GW before 2027.
xAI has made a seemingly counterintuitive decision: pausing Grok 5 training to rent out compute capacity. In an analysis dated October 21, 2026, Richard Windsor, founder of Radio Free Mobile, stated that this decision was made approximately six to nine months ago, resulting in year-over-year growth in data center business revenue of seven times and quarter-over-quarter growth of three times. He attributes this to a simpler calculation: the return on renting out compute has already surpassed the potential benefits of Grok 5 training.
Windsor’s estimates for spot pricing are as follows: the spot price for compute capacity under short-term contracts is approximately $30 billion to $50 billion per GW, yielding annualized five-year returns of 45% to 85%. He explicitly states that these calculations are RFM's own. Based on this estimate, any company with idle capacity should drop what it is doing and sell its compute to the highest bidder—exactly what xAI is doing.
However, there is a key structural asymmetry here. Windsor points out that new cloud providers are almost unable to leverage this spot premium because their financing models require selling compute via multi-year contracts in advance to raise funds for building data centers. In other words, the spot market rewards companies that already possess capacity and can flexibly switch its use (such as xAI), rather than those building capacity and locked in by financing terms. The term market prices are much more moderate; Windsor believes long-term deals are in the range of $20 billion to $25 billion per GW.