Musk’s xAI plans expansion of Colossus data center in Memphis

Elon Musk’s artificial intelligence company xAI is planning to expand its large data center operation in the Memphis area, according to a report by the Information. The expansion includes the purchase of a warehouse in nearby Southaven, Mississippi.

Property records and a person familiar with the matter show that xAI intends to convert the Southaven warehouse into a facility connected to its existing operations. The site would support the company’s growing infrastructure needs tied to artificial intelligence development.

xAI has already completed construction of a data center in Memphis known as Colossus. The company is also building a second facility in the area, which it refers to as Colossus 2.

Musk has previously said that xAI aims to construct the world’s largest data center dedicated to training artificial intelligence models. Earlier this year, he posted that Colossus 2 is expected to house about 550,000 chips supplied by Nvidia Corp.

The scale of the planned computing power suggests an investment that could reach tens of billions of dollars. The chips would be used to train advanced AI systems that require large amounts of processing capacity.

To support those ambitions, xAI has been raising significant amounts of capital throughout 2025. The company has pursued financing to fund both infrastructure development and the purchase of specialized hardware.

Earlier this year, xAI was in discussions to raise $20 billion through a combination of debt and equity. Part of the proposed funding was intended to secure Nvidia processors for the Colossus 2 facility, according to a prior Bloomberg News report.

The Memphis-area expansion reflects xAI’s continued push to scale its computing footprint rapidly. The addition of a site in Southaven would extend the company’s presence beyond Tennessee and deepen its regional investment.