SpaceXAI, a subsidiary of Space Exploration Technologies Corp. (SPCX), is considering an expansion in Texas with at least one new large-scale data center, according to a report by The Information citing people familiar with the matter. The company has explored several potential data center sites in Texas over the past few months. SpaceXAI is looking to expand its AI computing capacity beyond its existing Memphis hub as it seeks to become a major cloud provider, having recently signed agreements to lease large portions of its compute capacity to customers including Anthropic and Alphabet Inc.'s Google. SpaceX shares were down 1% in Wednesday's opening trade.
SpaceXAI Explored Multiple Texas Sites Over Past Few Months
According to The Information report, SpaceXAI has explored several potential data center sites in Texas over the past few months. The company is weighing multiple approaches for the expansion, including building new facilities from the ground up and converting existing warehouses into AI data centers, similar to how it repurposed a former manufacturing facility for its first Memphis site. SpaceXAI has also begun sending existing data center staff to Texas and recently posted job openings tied to data center development and construction in the state.
Memphis Facilities House Gigawatt of Compute Capacity
A Texas expansion could match or exceed the scale of SpaceXAI's existing facilities, which house around a gigawatt of compute capacity and hundreds of thousands of Nvidia Corp.'s (NVDA) GPUs, according to the report. The company has recently signed agreements to lease large portions of its compute capacity to customers including Anthropic and Google, creating a new revenue stream alongside its Grok AI offerings. To power its growing AI footprint, SpaceXAI has relied heavily on natural gas turbines alongside grid electricity. The company has installed dozens of mobile turbines in Tennessee and Mississippi and is developing a permanent gas-fired power plant in Mississippi through a joint venture with Solaris Energy Infrastructure.
SpaceXAI Added Over 40 Hires to Colossus Team
SpaceXAI has significantly expanded its data center workforce over the past year, adding more than 40 hires to its Colossus team, according to the report. Following SpaceX's merger with the AI unit in February, employees from the aerospace company have also been brought in to support data center operations. SpaceXAI, formerly known as xAI, became a SpaceX subsidiary following an acquisition in February.
Ross Nordeen Departed in March, New Leadership Appointed
The company has explored a Texas expansion for several months while reshuffling leadership overseeing its AI infrastructure, according to the report. After xAI co-founder Ross Nordeen departed in March, SpaceXAI President Michael Nicolls appointed Jake Palmer to lead physical infrastructure and SpaceX software engineering director Daniel Dueri to oversee compute infrastructure.
SpaceX in Talks With Pentagon for Data Center Capacity Deal
According to a report by The Wall Street Journal, SpaceX is in talks with the Defense Department to provide the agency with data center capacity worth billions of dollars. The report added that SpaceX is also considering plans to compete directly with neocloud providers, offering AI compute capacity at a lower price. A Pentagon deal for data center capacity would build on SpaceX's existing deal with the agency to provide access to its AI model. The Defense Department also signed similar deals with six other companies, including Nvidia, Google, Amazon.com Inc.'s AWS, OpenAI, Microsoft Corp., and Reflection AI.
SPCX Stock Performance
SPCX stock is down 18% year-to-date. Retail sentiment on Stocktwits around SpaceX trended in the 'bearish' territory at the time of writing. The Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM) are up 26% over the past 12 months.
FAQ
What data center expansion is SpaceXAI considering?
SpaceXAI is considering an expansion in Texas with at least one new large-scale data center. The company has explored several potential data center sites in Texas over the past few months, according to a report by The Information citing people familiar with the matter.
How much compute capacity do SpaceXAI's existing facilities have?
SpaceXAI's existing Memphis facilities house around a gigawatt of compute capacity and hundreds of thousands of Nvidia GPUs, according to the report. A Texas expansion could match or exceed this scale.
When did SpaceXAI become a SpaceX subsidiary?
SpaceXAI, formerly known as xAI, became a SpaceX subsidiary following an acquisition in February. Following the merger, employees from the aerospace company have been brought in to support data center operations.
