xAI, the artificial intelligence company founded by Elon Musk, will invest more than $20 billion to build a large-scale data center in Southaven, Mississippi, state Governor Tate Reeves said on Thursday.
The investment comes as booming demand for generative AI drives tech companies to sharply expand computing infrastructure. Data centers have become a focal point for spending by AI startups and hyperscalers seeking to train increasingly powerful models.
According to the governor’s statement, xAI expects to begin operations at the Southaven data center in February 2026. Musk had previously announced on December 30 that xAI had acquired a data center named “MACROHARDRR,” saying the facility would lift the company’s total computing capacity to 2 gigawatts, though he did not disclose the investment size or location at the time.
The Southaven site is located near a power plant recently acquired by xAI and close to its existing data center footprint in Memphis, Tennessee, the statement said. Memphis is home to xAI’s flagship supercomputer cluster, Colossus, which the company has described as the largest in the world.
The expansion highlights xAI’s aggressive push to compete more directly with leading AI developers such as OpenAI and Anthropic, whose ChatGPT and Claude models dominate much of the current generative AI market.
xAI’s spending underscores the heavy cash demands of the AI race. Bloomberg reported earlier on Thursday that the company burned $7.8 billion in cash during the first nine months of the year, reflecting the high cost of advanced data center hardware and large-scale model training.