xAI Expands AI Infrastructure with Third Data Center, Nearing 2GW Capacity

xAI Expands AI Infrastructure with Third Data Center, Nearing 2GW Capacity January 2, 2026 Elon Musk's artificial intelligence venture, xAI, is significantly scaling its computational infrastructure with plans for a third major data center, a move that underscores the intense resource demands of the ongoing AI race. The expansion highlights the critical role of power capacity as a strategic bottleneck for companies developing cutting-edge large language models. According to a post by Musk on the social media platform X on December 30, 2025, the company has purchased a third building for its operations. "xAI has bought a third building called MACROHARDRR," Musk stated, referencing a tongue-in-cheek project name that plays on Microsoft's branding. The new facility will be located in the Memphis, Tennessee area, near the company's existing data centers and a recently acquired natural gas power plant site. This latest acquisition will bring xAI's total planned data center capacity to nearly 2 gigawatts (GW), a colossal figure that rivals the power consumption of a mid-sized city. The company's first two facilities, named Colossus and Colossus 2, are also situated in the Memphis region. The development of this third site, currently a warehouse, was first reported by The Information. The aggressive build-out follows Musk's recent public ambition for xAI to possess more AI computing power than any other entity. It also builds upon the company's existing international partnership; in November 2025, xAI allied with Saudi Arabia's Humain to develop a separate 500-megawatt data center in the Middle Eastern country. The scale of this infrastructure push places xAI among the top tier of hyperscale operators in terms of power commitment, signaling a long-term, capital-intensive bet on the future of generative AI. However, such rapid expansion also brings increased scrutiny. xAI's first Memphis data center, Colossus, previously faced legal challenges over the unauthorized deployment of 26 gas turbines, pointing to the potential regulatory and environmental hurdles that accompany breakneck growth in the sector. Source: datacenterdynamics