Nvidia sells out in China despite writing it off; SpaceX becomes landlord to AI labs

By AI Secret · Wed, 21 Oct 2026.

The AI Secret newsletter, signed by Magna, covers, among others, two stories on the economics of AI compute. The first concerns Nvidia and China. The second concerns the results of SpaceX and its AI unit.

Nvidia and China: Jensen Huang says export controls have cut Nvidia's share of AI data center chips in China. That share went from near-monopoly to practically nothing. Even so, ByteDance, Alibaba and Tencent have ordered more than 3 million RTX PRO 5500 cards, worth over $35 billion.

That card is designed to comply with US export rules. It is weaker than the chips AI labs buy in bulk. The three companies want it mainly for inference.

According to the email, China's total orders exceed 6 million units. Nvidia expects to manufacture at most 3 million worldwide in 2027. Some partners have been told to expect between 5% and 10% of what they ordered.

An Nvidia spokesperson attributes the situation to "outdated US export controls." The newsletter reads this as Huang simultaneously telling Washington the market is lost while sitting on a waiting list. It concludes that major Chinese buyers are fighting over a second-tier card because compute capacity there is extremely scarce.

SpaceX and its AI unit: SpaceX reported $14.6 billion in revenue. It is its first profitable quarter as a public company. Its AI unit, renamed "Super Intelligence", brought in $7.56 billion, nine times more than a year earlier.

According to the newsletter, most of that figure is rent. Anthropic, Google and the startup Reflection AI lease capacity in the Colossus data centers, which SpaceX built to train Grok. The earnings release gives no figure for Grok itself.

A year ago, Musk's AI business was losing $1.7 billion per quarter. This quarter it earned $431 million. SpaceX spent $16.4 billion expanding capacity last quarter.

Musk told investors: "We are in an inflection moment". He now promises between $500 billion and $1 trillion in annual recurring revenue by the end of 2027. The email calculates that this amounts to up to 17 times this quarter's run rate.

The newsletter's tone is ironic: it portrays Musk as landlord to the labs that are overtaking him. The email provides no links to the original sources.