Elon Musk’s xAI is in talks to lease data center capacity in Saudi Arabia as the company expands its infrastructure to support AI model training, Bloomberg News reported on Wednesday, citing people familiar with the matter.
The company is discussing two options.
One is a proposal from Humain, an AI firm backed by Saudi Arabia’s sovereign wealth fund, which has offered several gigawatts of capacity. The other is a company building a 200-megawatt facility that is expected to be ready sooner.
According to the report, the Humain plan remains uncertain as the company has not yet started building much of the infrastructure it has promised. The unnamed second company has already begun work on the smaller facility, making it a more likely short-term option.
xAI is increasing its data center operations to compete with other AI developers, including OpenAI and Anthropic. The company’s cluster in Memphis, Tennessee, known as Colossus, is described as the largest supercomputer in the world.
Large technology firms are expected to spend $320 billion on AI development this year. Meta and CoreWeave also announced new investments in data centers this week.
Saudi Arabia’s Public Investment Fund is expected to play a key role in future financing for xAI. The Financial Times reported last week that the company could be valued between $170 billion and $200 billion, though Musk said xAI is not currently seeking funding.
