xAI Plans $20 Billion Data Center in Southaven, Mississippi

Elon Musk’s AI startup xAI is set to invest more than $20 billion to build a massive new data center in Southaven, Mississippi, according to Governor Tate Reeves. The move comes as generative AI continues to drive record demand for computing power and expansion of AI infrastructure.

xAI aims to compete with OpenAI’s ChatGPT and Anthropic’s Claude by scaling its training capacity for advanced AI models. The Southaven data center, named MACROHARDRR, is expected to begin operations in February 2026.

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Expanding xAI’s Compute Power

The new facility is part of xAI’s growing network of infrastructure:

• Located near xAI’s recently acquired power plant in Southaven
• Close to its existing Memphis, Tennessee data center, which houses the Colossus supercomputer cluster, touted as the world’s largest AI supercomputer
• Will increase xAI’s compute power to 2 gigawatts (GW), supporting more complex model training

Musk initially announced the acquisition of the Southaven site on December 30, 2025, without disclosing the investment size or location.

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AI Industry Context

Interest in data centers surged in 2025 as tech giants and AI startups invested billions to scale infrastructure. xAI has already spent $7.8 billion in cash in the first nine months of 2025, Bloomberg reported, reflecting the high costs of building advanced AI supercomputing capabilities.

The investment highlights the escalating AI arms race, with companies racing to secure the infrastructure necessary for next-generation large language models and AI applications.