xAI has bought a 1 million sq ft (92,905 sqm) site for a new data center in Memphis, as Elon Musk’s startup looks to expand its Colossus supercomputer.

Announced by the Memphis Chamber of Commerce on Friday, the land in the Whitehaven area of the city cost xAI $80 million, according to property records.

The company has purchased three parcels of land at 5400 Tulane Road, Whitehaven, through an affiliate company CTC Properties. It acquired an existing warehouse, as well as two adjacent sites totaling 100 acres.

It is close to the Southaven Combined Cycle natural gas power plant owned by Tennessee Valley Authority, which generates 780MW of power.

“xAI’s acquisition of this property ensures we’ll remain at the forefront of AI innovation, right here in Memphis,” said xAI’s Brent Mayo. “We’re committed to expanding alongside this community and doing what’s best for the city. As we transform this property and enhance our facility, we’ll bring more employment opportunities and economic growth to the area.”

How the data center will be powered has yet to be decided, but in comments to the Daily Memphian, local energy company Memphis Light Gas and Water said xAI had requested a “system-impact study” for up to 260MW of power.

The data center will be home to what has been described as the “world’s largest” deployment of Tesla megapack batteries, which will provide backup power to the site when the grid load is high.

Mayo added that the new data center could host up to 350,000 GPUs.

xAI came to Memphis last year, launching its Colossus supercomputer in a new data center housed in a former Electrolux factory in Memphis’s Boxtown district.

This data center reportedly runs 100,000 GPUs, but Musk said in October 2024 plans are afoot to increase this to 200,000, and the company revealed in December it would eventually like to run one million GPUs in Memphis. DCD reported last month that the company could open a second data center, and is in talks with Dell over a $5 billion order for new servers.

The company’s investments in Memphis include a plan to build what it claims will be the world’s largest ceramic membrane bioreactor, so that it can use wastewater to cool Colossus.

However, xAI has faced opposition from some community groups concerned about the data center’s impact on air quality and the strain it could put on the local power grid.

Ted Townsend, president and CEO of the Greater Memphis Chamber, said: “This significant expansion by xAI reinforces Memphis’s position as a premier destination for technological innovation.

“Their investment in this million-square-foot facility, along with xAI’s collaborative partnership, demonstrates the tremendous momentum we’re building in the Digital Delta. Memphis continues to prove itself as the ideal location for companies leading the future of technology.”