xAI Expands Computing Power with $20 Billion Mississippi Data Center Investment
In Focus
- xAI plans to start operating the Southaven data center in February 2026
- The data center is the third for the company in the greater Memphis area
- xAI will benefit from data center incentives, including waiver of franchise taxes
Elon Musk’s xAI is investing over $20 billion to establish a data center in Southaven, Mississippi. According to ABC News, Mississippi Governor Tate Reeves said the xAI data center project is the largest private investment in the history of the state.
Focus on data centers increased in 2025 as hyperscalers and tech giants increased their spending on AI infrastructure. xAI’s move to build a massive AI data center in Mississippi highlights its ambitious plan to train advanced models. Last year, the Elon Musk-led firm raised $10 billion to boost its AI infrastructure and compete with industry leaders like Anthropic and OpenAI.
xAI Expands Computing Power
xAI’s new data center, which is called “MACROHARDRR”, is located in DeSoto County, near Memphis, Tennessee. The data center will be xAI’s third facility in the greater Memphis area and is close to a power plant site that the company acquired recently in Southaven.
According to xAI’s CFO Anthony Armstrong, Memphis hosts the company’s supercomputer cluster called Colossus. With 2 gigawatts of computing power, the cluster has been touted as the largest in the world.
xAI plans to start operating the Southaven data center in February 2026. Elon Musk announced the purchase of the data center on December 30, 2025, but did not reveal the location or investment details.
News of xAI’s $20 billion data center investment surfaced as the Musk-led firm faced widespread probes after its AI chatbot Grok generated explicit images. Circulation of the images on X triggered Grok AI deepfake investigations in the EU, the U.K. and India.
Environmental Impact Concerns
xAI’s Mississippi data center announcement comes amidst rising environmental concerns. The company is facing scrutiny over its infrastructural projects in the Memphis area. Lobby groups, including the Southern Environment Law Center have raised air pollution concerns from xAI’s supercomputer facility.
The facility is located close to predominantly Black communities in the Memphis area. Another Southaven group, Safe and Sound Coalition, has collected over 900 signatures to support a petition that seeks to shut down xAI’s operations in the area.
According to a fact sheet released by the Mississippi Governor’s office, environmental responsibility is a major commitment for xAI. Earlier this week, xAI raised $2 billion in a Series E funding round. The company was targeting a $15 billion raise at a $230 billion valuation.
xAI to Benefit from Tax Incentives
xAI is set to benefit from a raft of data center incentives passed in 2024 in Mississippi. Under these rules, the state will waive sales, franchise, and corporate income taxes on the xAI infrastructure development.
The waiver of sales taxes on computing power will save xAI a substantial amount. The company will also benefit from lower property taxes in DeSoto County.
Governor Reeves said the Elon Musk xAI investment would create hundreds of permanent jobs and thousands others indirect sub-contracting. Reeves added that the investment would also generate tax revenue for the state to support delivery of public services.
