xAI Bets $20 Billion on Mississippi, Deploys $40B in One Week to Chase OpenAI
January 9, 2026 · by Fintool Agent
Elon Musk's xAI is investing more than $20 billion to build a data center in Southaven, Mississippi—the largest private investment in the state's history—just three days after closing a $20 billion Series E funding round, racing to deploy $40 billion in infrastructure spending in a single week as the AI arms race with OpenAI intensifies.
The announcement came on the same day that OpenAI and SoftBank revealed a $1 billion investment in SB Energy to support their competing Stargate project, setting up a direct infrastructure showdown between the world's two most valuable AI companies.
The World's Largest Supercomputer
The new facility, which xAI has dubbed "MACROHARDRR"—an apparent jab at Microsoft-0.44%—will be xAI's third data center in the greater Memphis area. Once operational, the combined campus will deliver approximately 2 gigawatts of computing power, which xAI claims will make it "by far the most powerful AI system on Earth."
"xAI is scaling at an immeasurable pace—we are building our third massive data center in the greater Memphis area," Musk said in a statement. "MACROHARDRR pushes our Colossus training compute to ~2GW. This is insane execution speed by xAI and the state of Mississippi."
The facility will be built by retrofitting an 810,258-square-foot warehouse—the former GXO Logistics building at 2400 Stateline Road in Southaven, DeSoto County. It sits about a mile from xAI's Colossus 2 campus in Memphis's Whitehaven neighborhood and near a newly acquired power plant site.
Operations are expected to begin in February 2026.
Ask Fintool AI Agent$40 Billion Deployed in One Week
The Mississippi announcement caps a remarkable week of capital deployment for xAI. On January 6, the company announced it had closed an oversubscribed $20 billion Series E funding round—exceeding its initial $15 billion target—at a valuation of approximately $230 billion.
| Metric | Details |
|---|---|
| Series E Raised | $20 billion |
| Mississippi Investment | $20+ billion |
| Total Weekly Deployment | $40 billion |
| Post-Money Valuation | $230 billion |
| Target Computing Power | 2 gigawatts |
The Series E round included major institutional investors such as Valor Equity Partners, Stepstone Group, Fidelity Management & Research Company, Qatar Investment Authority, MGX, and Baron Capital Group. Strategic investors Nvidia+0.04% and Cisco+0.18% also participated, providing crucial supply chain partnerships for xAI's GPU buildout.
xAI has indicated that Grok 5 is currently in training, and the company is focused on launching new consumer and enterprise products.
The Race Against OpenAI
The timing of xAI's Mississippi announcement—the same day as OpenAI's SB Energy partnership—underscores the intensity of competition in AI infrastructure.
OpenAI and SoftBank are each investing $500 million in SB Energy, which will build and operate OpenAI's 1.2 gigawatt data center in Milam County, Texas. This investment builds on the $500 billion Stargate commitment announced at the White House in January 2025.
The comparison reveals xAI's aggressive posture:
| Company | Total Compute Capacity | Key Announcement (Jan 9) |
|---|---|---|
| xAI | 2 GW (combined Memphis facilities) | $20B Mississippi investment |
| OpenAI/Stargate | 1.2 GW (Texas facility) | $1B SB Energy investment |
"Partnering with SB Energy brings together their strength in data center infrastructure and energy development and OpenAI's deep domain expertise in data center engineering," said OpenAI President Greg Brockman.
The infrastructure battle reflects both companies' view that compute power will be the key bottleneck for advanced AI development.
Ask Fintool AI AgentMississippi's Massive Tax Breaks
Mississippi is rolling out the red carpet. Under incentive legislation passed in 2024, the state will waive all sales, corporate income, and franchise taxes on the xAI development. DeSoto County and the city of Southaven have also agreed to substantially reduced property taxes.
The Mississippi Development Authority did not immediately disclose the total value of tax incentives, but savings on sales taxes for computing equipment alone would likely reach billions of dollars.
"This record-shattering $20 billion investment is an amazing start to what is sure to be another incredible year for economic development in Mississippi," said Governor Tate Reeves. "This is the largest economic development project in Mississippi's history. It sets the pace for continued high-tech investments across our state."
The project is expected to create hundreds of permanent jobs and thousands of construction and subcontracting positions.
Environmental Controversy Looms
The expansion comes amid ongoing legal challenges over xAI's existing Memphis operations.
The NAACP and Southern Environmental Law Center have filed an intent-to-sue notice and subsequently appealed air permits granted to xAI, alleging the company violated the Clean Air Act by operating dozens of methane gas turbines without proper permits or pollution controls.
"All too often, big corporations like xAI treat our communities and families like obstacles to be pushed aside," said NAACP President Derrick Johnson. "We cannot afford to normalize this kind of environmental injustice—where billion-dollar companies set up polluting operations in Black neighborhoods without any permits and think they'll get away with it."
xAI's Memphis facilities are located near the historically Black neighborhood of Boxtown in southwestern Memphis, an area that already has the highest rate of asthma-related hospital visits in Tennessee and cancer rates four times the national average.
A fact sheet released by the Mississippi governor's office stated that environmental responsibility is a "core commitment" for xAI, but the company did not immediately respond to questions about environmental concerns for the new Southaven facility.
The Safe and Sound Coalition, a Southaven group opposing xAI's developments, has gathered more than 900 signatures on a petition calling for shutting down xAI's operations in the area.
Ask Fintool AI AgentWhat to Watch
Operations launch (February 2026): xAI expects the Southaven facility to begin operations next month. Any delays could signal execution challenges.
NAACP litigation timeline: The 60-day notice period for Clean Air Act litigation may result in a formal lawsuit against xAI's Memphis operations, which could have implications for the new Mississippi facility.
Grok 5 release: xAI has indicated its next-generation model is in training. The new infrastructure is designed to support increasingly powerful AI systems.
Stargate progress: OpenAI's competing infrastructure buildout in Texas provides a direct benchmark for comparing execution speed and scale.
Grid reliability: With xAI targeting 2GW of power consumption in the Memphis area, Tennessee Valley Authority capacity and reliability will be critical watchpoints.
Related Companies: Tesla+0.89% | Nvidia+0.04% | Cisco+0.18% | Microsoft-0.44% | Softbank+0.78% | Oracle+3.09%