Elon Musk’s artificial intelligence startup xAI is moving ahead with a massive expansion plan, announcing an investment of more than $20 billion in a new data centre in Southaven, Mississippi, as competition intensifies in the global AI sector.
According to a Reuters report, the facility is expected to begin operations in February 2026 and will significantly boost xAI’s computing capacity as it takes on rivals such as OpenAI and Anthropic.
The announcement was confirmed by Mississippi Governor Tate Reeves on January 8, who said the project marks one of the largest private investments in the state’s history.
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What we know about the Mississippi data centre
The Southaven facility will be located close to xAI’s recently acquired power plant site in Mississippi and near its existing data centre operations in Memphis, Tennessee, the governor’s statement noted. Memphis already hosts xAI’s flagship supercomputer cluster, Colossus, which the company has described as one of the largest in the world.
Elon Musk had earlier revealed on December 30 that xAI had acquired a data centre named “MACROHARDRR”, saying the purchase would raise the company’s total computing capacity to 2 gigawatts (GW). At the time, Musk did not disclose the investment size or location.
Rising costs and mounting losses
The expansion comes amid mounting financial pressure on the startup. As reported earlier by Bloomberg, xAI posted a net loss of $1.46 billion in the September quarter, widening from a $1 billion loss in the previous quarter. Internal documents cited by Bloomberg show that the company spent $7.8 billion in cash during the first nine months of the year.
The losses reflect heavy spending on data centre infrastructure, high-end hardware, talent acquisition and software development, including systems intended to power future humanoid robots.
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Why data centres are central to xAI’s strategy?
Interest in large-scale data centres surged last year as tech companies and AI hyperscalers invested billions to meet soaring demand for generative AI. Training and running advanced AI models requires enormous computing power, making access to energy and infrastructure a key competitive advantage.
According to Reuters, xAI’s Mississippi investment aligns with this broader trend and underlines Musk’s ambition to scale rapidly and close the gap with established players such as OpenAI’s ChatGPT and Anthropic’s Claude.
