This is the largest private investment ever recorded in the state, revealing an escalation in the global need for computing power.

The facility, known as MACROHARDRR, will span about 800,000 square feet and is scheduled to begin operations in February 2026. Governor Tate Reeves confirmed the investment, describing it as a big moment for Mississippi’s economy and its focus on high-end digital infrastructure.

xAI is scaling fast, and Southaven is important to that plan. The site will expand the company’s Colossus supercomputer cluster to almost 2 gigawatts of compute power, placing it in the same league as hyperscale systems operated by Google, Microsoft and Amazon.

The data centre is being developed from a former GXO logistics warehouse and sits close to xAI’s newly acquired power plant site in Southaven, as well as its existing data centre operations in Memphis, Tennessee. 

Memphis already hosts Colossus, which the company has described as the largest supercomputer cluster in the world. The Southaven build effectively extends that footprint across state lines.

Governor Reeves spoke about the scale of the deal, calling it “the largest economic development project in Mississippi’s history.” State officials say the investment will create hundreds of permanent jobs in DeSoto County and deliver long-term tax revenue to support education, healthcare and public safety.

Musk first disclosed the purchase of MACROHARDRR on December 30, noting that it would lift xAI’s total compute capacity to 2GW, though he did not reveal the location or cost at the time. Those details now underline how capital-heavy the push for advanced computing has become.

Demand for data centres surged last year as companies rushed to secure the hardware and power needed to train increasingly complex models.

Bloomberg reported that xAI spent $7.8 billion in cash in the first nine months of 2025 alone, a reminder that firms in this space burn through capital at an exceptional pace.

Globally, investment is growing. Industry forecasts put hyperscaler capital expenditure above $600 billion in 2026, up 36% from the previous year, with around three-quarters of that spending tied directly to advanced computing infrastructure. 

More than 770 future hyperscale facilities are already in the pipeline, and single campuses are now measured in gigawatts rather than megawatts.

Against that backdrop, the Mississippi Data Centre places xAI among the world’s biggest infrastructure builders.

This comes just a day after he floated the possibility of Tesla shareholders voting on whether the automaker should invest in xAI, a change that could increase ties between the two companies without formally merging them. 

“It would be great if Tesla could invest,” he noted earlier, but stressed that shareholder approval would be necessary.

Despite the speculation, Tesla and xAI have yet to issue official statements addressing the merger rumours or clarifying their future relationship.

xAI, Musk’s AI startup behind the controversial Grok chatbot, has grown aggressively since its $33 billion acquisition of X (formerly Twitter) in March 2025. 

That acquisition placed the combined group’s valuation at $80 billion, but sources told Reuters that xAI had discussed valuations as high as $200 billion in its latest funding talks. 

Whether those numbers show the company’s real market potential is still uncertain, as Musk has publicly downplayed suggestions of a fresh capital raise: “We have plenty of capital.”

What is apparent, however, is that xAI is positioning itself as the AI backbone of Musk’s expanding industrial network. Its Grok chatbot has already been deployed in Starlink’s customer support operations, with integration into Tesla’s Optimus robots also on the horizon.

On X, Grok facilitates real-time interactions, further tightening the web of Musk-owned enterprises.

In July 2025, xAI raised $10 billion, half through equity led by Morgan Stanley and half through debt financing. Notably, SpaceX, another Musk company, contributed $2 billion to this round, marking its first known external investment into xAI. 

Reports from The Wall Street Journal indicated that SpaceX’s involvement was part of a $5 billion equity round. 

Operationally, xAI is pushing infrastructure goals. Its Memphis-based supercomputer, Colossus, already runs on over 200,000 GPUs, with plans to scale to one million. The firm is targeting $1 billion in revenue by the end of 2025 and forecasts $19 billion by 2029, supported by an $18 billion investment into its compute backbone.

Despite its commercial momentum, Grok stumbled in July when it produced antisemitic and offensive content, triggering a public apology and a promised codebase review. Still, Musk stands by the chatbot, calling it “the smartest AI in the world” and promising deeper integration across his companies.

From a governance standpoint, merging Tesla, a publicly traded company, with xAI, which remains private, could ignite regulatory challenges. Musk’s current strategy appears to favour operational integration over corporate consolidation. 

Embedding Grok into Tesla vehicles, Optimus robots, and Starlink services could offer the benefits of synergy without the legal complexities of a merger.

For now, Musk says Tesla will not merge with xAI. But as history shows, in Musk’s empire, “no” today doesn’t always mean “never.”