Baker claims installed compute capacity trades at massive discount to spot prices making repricing wave inevitable.
“ are still going vertical in 2026. And because the entire contracted base of installed compute — every long-term deal signed over the past two years — trades at a massive discount to current spot prices, a repricing wave is inevitable. ”
Baker explains Meta's compute rental was inspired by SpaceX selling clusters at massive premiums to contracted rates.
“What it was is they saw SpaceX have a big installed base of compute and sell some big trading optimized clusters into the market at a truly massive premium to these contracted rates.”
Baker argues contracted compute trades at massive discount to spot, repricing will drive acceleration despite potential spot price declines.
“you have the contracted base of installed compute trading at a massive discount to the current spot market, and as those contracts roll off and compute gets repriced higher, spot could decline and compute will still get repriced higher,”