Elon Musk’s AI startup xAI is quietly establishing a major presence in Atlanta, partnering with X (formerly Twitter) to build a massive data center powered by approximately 12,000 Nvidia GPUs. The facility represents a $700 million investment in cutting-edge AI infrastructure, financed through municipal bonds orchestrated by Develop Fulton, Atlanta’s economic development agency.
The hardware breakdown is substantial: X is contributing the lion’s share with all of the facility’s A100 GPUs plus 11,000 H100 GPUs, while xAI adds additional computing power through Mellanox switches and high-bandwidth networking equipment. The H100 chips, Nvidia’s Hopper-generation processors, cost between $277,000 and $500,000 per eight-chip rack, making this one of the most significant AI infrastructure investments in the region.
According to documents submitted to Develop Fulton, X is providing 90% of the hardware ($442 million) while xAI contributes 10% ($258 million). The facility is designated for “developing and training artificial intelligence products,” including large language models and semantic search capabilities for the X platform. Data center experts describe it as having computing power comparable to facilities operated by hyperscalers like Google or Amazon, with X representatives calling it an “exascale” data center capable of computing “trillion-parameter AI.”
The Atlanta facility is significantly smaller than xAI’s Memphis data center, nicknamed Colossus, which Musk claims is the world’s largest. While the Georgia location houses roughly 12,448 GPUs requiring an estimated 20 megawatts of power, the Memphis facility has requested 150 megawatts from the Tennessee Valley Authority. Notably, the Atlanta data center uses chips that don’t require liquid cooling, avoiding the water consumption controversy that has plagued the Memphis operation.
Both companies will receive tax abatements worth approximately $10 million over 10 years, split proportionally to their investments. Develop Fulton estimates the project will generate an overall economic impact exceeding $241 million. The facility will maintain 24 jobs with no additional hiring planned, currently employing about 16 X workers and three xAI employees in the area.
This partnership exemplifies Musk’s strategy of pooling resources across his companies to compete with AI giants like OpenAI and Google. XAI recently launched the latest version of its Grok chatbot, which Musk claims has “more than 10 times” the compute power of its predecessor.
Key Quotes
He obviously is a competitor. He’s working hard, and he’s raised a lot of money for xAI and they’re trying to compete with us from a technological perspective, from getting the product into the market, and I wish he would just compete by building a better product.
OpenAI CEO Sam Altman made this statement in response to Musk’s $97.4 billion bid to acquire OpenAI’s controlling nonprofit. The comment highlights the intensifying rivalry between Musk’s xAI and OpenAI, with Altman suggesting Musk should focus on product innovation rather than acquisition attempts.
more than 10 times
Elon Musk claimed the latest version of xAI’s Grok chatbot has this much more compute power than its predecessor. This statement, made during Monday’s release announcement, underscores how the massive GPU investments in facilities like the Atlanta data center are translating into significantly more powerful AI capabilities.
Our Take
The Atlanta data center reveals Musk’s calculated approach to building AI infrastructure at unprecedented speed and scale. By leveraging X’s existing resources and municipal financing mechanisms, xAI is rapidly closing the infrastructure gap with better-funded competitors. The 90-10 hardware split between X and xAI is particularly telling—it suggests X is essentially subsidizing xAI’s growth while gaining access to cutting-edge AI capabilities for its platform.
What’s most striking is the operational efficiency: building exascale data centers in months rather than years, avoiding liquid cooling complications, and securing substantial tax incentives. This execution speed could prove decisive in the AI race, where model capabilities often depend on available compute power. However, the concentration of resources across Musk’s companies raises questions about potential conflicts of interest and whether this approach is sustainable long-term, especially as xAI seeks to compete independently in the AI market.
Why This Matters
This development signals a significant escalation in the AI infrastructure arms race, with xAI positioning itself as a serious competitor to established players like OpenAI, Google, and Anthropic. The $700 million investment demonstrates that competing in frontier AI requires massive capital expenditures and computing resources, potentially consolidating the industry around well-funded players.
The partnership between X and xAI reveals Musk’s strategy of leveraging synergies across his business empire to accelerate AI development. By combining resources, Musk can build competitive AI infrastructure faster and more cost-effectively than starting from scratch. This approach could provide xAI with advantages in data access, distribution channels, and capital efficiency.
For the broader AI industry, this facility represents the growing geographic distribution of AI computing power beyond traditional tech hubs. Atlanta’s emergence as an AI infrastructure location could influence where future data centers are built, driven by factors like power availability, tax incentives, and regulatory environments. The 122-day construction timeline for xAI’s Memphis facility also demonstrates how quickly AI infrastructure can be deployed when prioritized, potentially accelerating the pace of AI development industry-wide.
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Source: https://www.businessinsider.com/xai-elon-musk-x-new-atlanta-data-center-2025-2