Elon Musk’s artificial intelligence startup, xAI, plans to invest more than $20 billion to develop a large-scale data center in Southaven, Mississippi, according to a statement released Thursday by Governor Tate Reeves. The investment comes as rapid growth in generative AI drives soaring demand for high-powered computing infrastructure.
Interest in data centers surged last year as major technology firms and AI hyperscalers committed billions of dollars to expand capacity. xAI’s latest move highlights its aggressive strategy to strengthen its position against leading AI developers such as OpenAI’s ChatGPT and Anthropic’s Claude, by training more advanced and resource-intensive models.
According to the statement, xAI aims to begin operating the Southaven data center in February 2026.
Musk had previously revealed on December 30 that xAI had acquired a data center named “MACROHARDRR.” At the time, he said the purchase would increase the company’s total computing capacity to 2 gigawatts, though he did not disclose the site’s location or the scale of the investment.
The new facility is located near xAI’s recently acquired power plant site in Southaven and its existing data center in Memphis, Tennessee, the governor’s office said.
Memphis is also home to xAI’s massive supercomputer cluster known as Colossus, which the company has described as the largest of its kind globally.
Earlier on Thursday, Bloomberg reported that xAI spent approximately $7.8 billion in cash during the first nine months of the year. Heavy cash burn is common among AI startups, as vast sums are poured into acquiring cutting-edge hardware needed to support large-scale data center operations.
