Three people familiar with the matter revealed that SpaceXAI, Elon Musk’s artificial intelligence business entity, is preparing to build at least one large data center in Texas. This expansion will significantly expand SpaceX’s AI computing resources beyond its existing computing hub in Memphis, Tennessee.
The commercialization progress of SpaceXAI's own AI product Grok is not as expected. The company has recently reached agreements to lease computing power to external parties. If this expansion is successfully implemented, SpaceXAI is expected to grow into an important cloud computing power service provider.
Two people familiar with the matter said that SpaceXAI has inspected many potential sites in Texas in recent months and discussed various construction options: it can either acquire new land for construction or transform existing warehouses to build data centers. The model is exactly the same as SpaceXAI's transformation of old factories to build the first data center in Memphis.
A person familiar with the matter said that the planned scale of the new project in Texas will be comparable to or even exceed the existing computing power cluster in Memphis. SpaceX disclosed that the two operational data centers have a total computing power of approximately 1 gigawatt and have deployed hundreds of thousands of NVIDIA GPUs.
Two sources revealed that SpaceXAI has transferred existing data center employees to Texas to make preliminary preparations for the expansion. Last month, the company recruited data center development leaders in Austin and Bastrop. The job description shows that this position is responsible for the implementation of data centers and is also responsible for "land selection, lease negotiations, asset acquisitions" and other matters. Earlier this month, SpaceX also released temporary job recruitment to support the construction, expansion and operation of data centers in Conroe and other places.
Musk has always dreamed of launching and operating a huge orbital space data center network in the future, but at this stage SpaceXAI's computing infrastructure expansion is still focused on ground facilities. The company said it does not rule out the continued expansion of ground data centers, but it has not yet publicly disclosed the location of new AI computing power facilities.
The continued construction of new computing facilities will further drive up AI infrastructure spending. SpaceX's AI-related capital expenditures soared to $7.7 billion in the first quarter, about three times the same period last year. Morgan Stanley analysts predicted before SpaceX’s IPO in June that SpaceX’s AI-related capital expenditures alone would consume a total of US$120 billion in cash from 2026 to 2027.
The CEO of Supermicro posted on the social platform X in June that the company was assisting SpaceXAI in building another gigawatt AI data center within a year, but did not specify the project location. This AI server manufacturer has previously supplied servers and cooling equipment equipped with Nvidia chips to SpaceXAI.
The timetable for the commissioning of SpaceX's new data center is unclear. The local government in Conroe, Texas, received multiple interview inquiries but did not respond; SpaceX also declined to comment on this report.
On the eve of the IPO, SpaceX regarded rapid expansion of computing power as the core competitive advantage of its AI business. However, the expansion of its own Grok products to enterprise customers has been hindered, prompting Musk to comprehensively adjust its AI product strategy in recent months.
In June, SpaceXAI announced that it had reached a computing power rental agreement to rent computing power resources on a large scale to Anthropic, Google and other companies. In the first quarter, SpaceX invested heavily in AI infrastructure and consumed huge amounts of cash flow. This computing power leasing business became a new source of income.
However, Musk said that SpaceXAI can take back the leased computing power at any time according to its own needs. In addition, SpaceX has finalized a $60 billion acquisition of AI startup Cursor. Cursor plans to break out of the coding tool track and develop top-notch general-purpose large models by the end of this year.
LinkedIn information shows that SpaceXAI has significantly expanded its data center team in the past year, adding more than 40 employees to the Colossus computing cluster. A person familiar with the matter revealed that after SpaceX completed the integration of the original xAI in February 2026, SpaceX internal employees were also transferred to support data center operations.
A source said that SpaceXAI has been preparing to expand its Texas data center for several months. In the past year, this business segment has undergone multiple organizational adjustments and frequent changes in management. It is worth noting that Ross Nordin, the original co-founder of xAI, resigned in March. He was previously solely responsible for the construction of the data center and regularly reported the progress of the project to Musk.
In early April, SpaceXAI President Michael Nichols completed the management appointment and announced in an internal memo: Jack Palmer will be responsible for the physical infrastructure, and SpaceX Software Engineering Director Daniel Duery will be in charge of the computing infrastructure sector.
The data center currently operated by SpaceXAI relies heavily on natural gas turbine units to supplement power grid power. The company has deployed dozens of mobile gas turbines in Tennessee and Mississippi, and has established a joint venture with Houston-based Solaris Energy Infrastructure to build permanent gas-fired power plants in Mississippi.
At the same time, SpaceXAI is also promoting further expansion of the Memphis area and planning to build a third data center. Late last year, SpaceXAI purchased an 810,000-square-foot warehouse in Mississippi, adjacent to the existing Memphis computing cluster.
However, in Memphis, SpaceXAI’s use of gas turbines, water consumption and other issues have been strongly opposed by local residents, politicians and environmental groups. During the launch of a cost-cutting plan earlier this year, the AI business unit postponed an $80 million wastewater recycling facility project that planned to recycle sewage from data centers and surrounding industrial sites.
A person familiar with the matter said that in addition to deploying in Texas, SpaceXAI has also sent employees to Florida for inspections in recent weeks, and has simultaneously announced data center job recruitment in Jacksonville.
A spokesperson for the Jacksonville city government said last week that the local government had not received SpaceXAI’s data center construction plan and there has been no communication between the two parties; the spokesperson did not continue to respond to interview requests this week.
Musk's companies have long had industrial ties with the two areas: SpaceX and Tesla are jointly building a Terafab semiconductor factory in Grimes County near Conroe. Federal Trade Commission documents show that Musk acquired APR Energy, a Jacksonville-based power generation company, in May.
State-level industrial and commercial information shows that APR Energy’s business covers Tennessee, Mississippi, Texas and other areas where SpaceXAI has deployed data centers. People familiar with the matter confirmed that Musk's AI business has previously purchased gas turbine units from APR Energy.