Elon Musk’s SpaceX AI plans to build at least one gigawatt-scale AI data center in Texas, with a scale comparable to or even exceeding that of its Memphis facility, further intensifying the race in AI infrastructure investment. The company’s AI-related capital expenditures in the first quarter have already risen to $7.7 billion, tripling year-over-year, as it expands computing capacity while facing significant financial outlays and energy supply pressures.
SpaceX AI, the artificial intelligence company under Elon Musk, is extending its data center footprint into Texas, with an expansion scale aiming to match or even surpass that of its existing Memphis facility—further underscoring the company’s aggressive investment strategy in AI infrastructure.
According to a Wednesday report by tech media outlet The Information, SpaceX AI has evaluated multiple potential sites in Texas and has begun laying the groundwork for at least one large-scale data center. The company has already deployed some staff from its existing data centers to the region and recently posted numerous infrastructure-related job openings in Austin, Bastrop, and Killeen.
This expansion will further intensify SpaceX AI’s already substantial capital expenditure burden. The company’s AI-related capital expenditures in the first quarter surged to $7.7 billion, roughly triple the amount from the same period last year. Morgan Stanley analysts previously forecast that SpaceX AI would consume a total of $120 billion in cash between 2026 and 2027, primarily due to investments in AI infrastructure.
Multi-site Deployment, Scaled to Match Memphis
SpaceX AI currently operates two data centers with a combined computing capacity of approximately 1 gigawatt, equipped with hundreds of thousands of NVIDIA GPUs.
According to two sources familiar with the matter who spoke to The Information, SpaceX AI has discussed several options for its Texas expansion, including building multiple new data centers from the ground up and retrofitting existing warehouse facilities—a strategy mirroring its conversion of a defunct manufacturing site in Memphis into its first data center.
Charles Liang, CEO of Supermicro, stated on X in June this year that his company is assisting SpaceX AI in constructing “another brand-new gigawatt-scale AI data center” within a year, though he did not disclose the specific location. Supermicro has previously highlighted its partnership with SpaceX AI, supplying NVIDIA-based servers and cooling equipment.
Notably, the expansion plan currently lacks a definitive timeline.
Mounting Capital Expenditures, Pursuing Diversified Revenue Streams as a Hedge
Faced with continuously rising capital expenditures, SpaceX AI has begun exploring new revenue streams to offset these costs.
In June this year, the company announced that it would lease substantial computing capacity to firms such as Anthropic and Google, with Musk stating that the company could reclaim the relevant computing resources when needed.
Meanwhile, SpaceX AI has reached a $60 billion agreement to acquire AI startup Cursor, which is seeking to expand beyond programming and plans to develop a leading general-purpose model by the end of this year.
Management Restructuring and Infrastructure Team Expansion
Over the past year, SpaceX AI has undergone a series of organizational changes. Co-founder Ross Nordeen departed in March this year; he had previously overseen the company’s data center construction and frequently reported directly to Musk.
In early April this year, SpaceX AI President Michael Nicolls announced a new leadership structure via an internal memorandum: Jake Palmer will oversee physical infrastructure, while Daniel Dueri, Director of Software Engineering at SpaceX, will lead computing infrastructure.
On staffing, SpaceX AI’s data center team, Colossus, has added more than 40 employees over the past year and, following the merger of SpaceX and XAI in February this year, has integrated SpaceX personnel to assist with operations.
Natural Gas Dependence Sparks Controversy; Energy Footprint Expands Across Multiple States
In terms of energy security, SpaceX AI relies heavily on natural gas turbines to supplement grid power for its data centers. It has already installed dozens of mobile turbines in Tennessee and Mississippi and is developing a permanent natural gas-fired power plant in Mississippi through a joint venture with Houston-based Solaris Energy Infrastructure.
However, this energy strategy has drawn strong opposition in Memphis. Local residents, politicians, and environmental groups continue to exert pressure over the use of natural gas turbines and associated water consumption concerns.
Earlier this year, SpaceX AI further inflamed tensions by postponing construction of an $80 million wastewater recycling facility as part of its cost-cutting measures.
In the Memphis region, SpaceX AI continues to advance construction of its third data center and acquired a warehouse of approximately 75,000 square meters in Mississippi at the end of last year. Additionally, SpaceX AI has deployed staff to Jacksonville, Florida, and posted job openings for data center positions. APR Energy, a power generation equipment supplier acquired by Elon Musk in May this year and headquartered in Jacksonville, operates in Tennessee, Mississippi, and Texas; SpaceX AI had previously procured turbines from APR Energy.
Texas holds particular strategic significance for Musk—SpaceX and Tesla are jointly constructing a semiconductor manufacturing facility in Grimes County near College Station, and SpaceX AI’s decision to locate in Texas aligns with the broader geographic consolidation trend across Musk’s portfolio of businesses.