Elon Musk's artificial intelligence company xAI has announced a landmark $20 billion investment to build a data centre in Southaven, Mississippi, representing the largest private investment in the state's history according to Governor Tate Reeves.

Project Details and Scale

The data centre, designated as MACROHARDRR, will be constructed in Mississippi's DeSoto County near Memphis, Tennessee. This facility marks xAI's third data centre in the greater Memphis area, contributing to what the company describes as a cluster of facilities.

xAI CFO Anthony Armstrong stated that the cluster of data centres will house "the world's largest supercomputer" with 2 gigawatts of computing power, positioning the facility as a significant technological infrastructure development.

Environmental Concerns and Community Opposition

The announcement comes amid growing scrutiny over xAI's data centre projects in the Memphis area. The NAACP and the Southern Environmental Law Center have raised concerns regarding air pollution generated by xAI's supercomputer facility, particularly its impact on predominantly Black communities in Memphis.

Local opposition has organized through the Safe and Sound Coalition, a Southaven group that has launched a petition calling for the shutdown of xAI's operations in the area. The petition had received more than 900 signatures as of Thursday afternoon, demonstrating community resistance to the project.

A fact sheet released by the Mississippi governor's office addressed these concerns, stating that environmental responsibility represents a "core commitment" for xAI, though the company did not immediately respond to requests for comment about specific environmental concerns.

Economic Impact and Tax Incentives

Governor Reeves predicted the investment will generate substantial economic benefits for the region, including hundreds of permanent jobs, thousands of indirect subcontracting positions, and increased tax revenue to support public services.

Under incentives for data centres passed in 2024, Mississippi will waive all sales, corporate income, and franchise taxes on the xAI development. The savings on sales taxes for the computing power purchases alone would likely represent substantial value, though the Mississippi Development Authority did not immediately respond to questions about the total tax revenue the state will forgo.

DeSoto County and the city of Southaven have also agreed to provide substantially reduced property tax rates as part of the incentive package. xAI expects to begin data centre operations in Southaven next month, indicating an accelerated timeline for the project's initial phase.

Elon Musk's artificial intelligence startup xAI reported significantly widening losses as the company accelerates its expansion efforts, according to internal financial documents. The AI company posted a net loss of $1.46 billion in the September quarter, representing a substantial increase from the $1 billion loss recorded in the previous quarter.

Financial Performance Shows Mixed Results

Despite mounting losses, xAI demonstrated strong revenue momentum during the quarter. The company's financial performance for the September quarter reveals both challenges and growth opportunities:

The company's revenue nearly doubled quarter-over-quarter to $107 million for the three-month period ended September 30, 2025. Gross profit showed even more dramatic improvement, surging to $63 million from just $14 million in the prior quarter.

Aggressive Cash Deployment Strategy

xAI is burning through cash rapidly as it invests heavily in infrastructure and talent acquisition. In the first nine months of the year, the company spent $7.8 billion in cash on various expansion initiatives including building data centers, recruiting AI talent, and developing software capabilities. The company paid almost $160 million in stock-based compensation through September, reflecting the competitive nature of the AI talent market.

The startup's EBITDA loss reached $2.4 billion through September, exceeding the company's initial projection of $2.2 billion for the full year. This indicates that expenses continue to significantly outpace earnings as the company prioritizes rapid growth over near-term profitability.

Strategic Vision and Product Development

xAI executives outlined the company's strategic direction during an investor call, emphasizing their focus on building AI agents and software at unprecedented speed. The company's ultimate goal is to develop AI that is self-sufficient and capable of powering humanoid robots, particularly Tesla's Optimus robot designed to replace human labor.

Key strategic initiatives include:

• Development of "Macrohard" - an AI-only software company concept
• Integration of Grok chatbot across Musk's ecosystem
• Building AI agents and advanced software capabilities
• Achieving what executives term "escape velocity" in AI development

Interconnected Business Ecosystem

Musk's various business ventures demonstrate significant integration, with xAI's Grok chatbot fully integrated into X (formerly Twitter) and available in Tesla vehicles. SpaceX has invested in xAI, while xAI has spent hundreds of millions on Tesla Megapack batteries. However, Tesla shareholders voted against a proposal for the automaker to invest in xAI, though the company's board continues to consider next steps.

Leadership Changes and Funding Position

The company has undergone notable leadership transitions, with Anthony Armstrong joining as Chief Financial Officer and Jon Shulkin taking on the Chief Revenue Officer role. Mike Liberatore, the previous CFO, resigned after just three months in the position.

xAI has raised at least $40 billion in equity funding to date, including a recent $20 billion round announced earlier this month. Company executives expressed confidence about having sufficient resources to continue aggressive spending, though the firm may fall short of its annual revenue target of $500 million, having reported over $200 million in sales through September.