Elon Musk has bought a flagship data center leased to his artificial intelligence tech company, xAI, that is a core part of his strategy to dominate the businesses of AI and space travel.
An affiliate of Musk's rocket company, SpaceX, acquired the 785,000-square-foot property in Memphis, Tennessee, for $185 million, according to public records. The seller was Phoenix Investors, a Milwaukee-based firm that buys and renovates industrial properties.
XAI, operating as a subsidiary of SpaceX since Musk merged the companies this year, has occupied and operated the Memphis property as a data center since June 2024. The facility on Paul R. Lowry Road, a former Electrolux appliance factory sitting on 217 acres, serves as the nexus of a cluster of high-density data centers SpaceX runs in greater Memphis that form the firm's so-called Colossus supercomputer project.
Musk plans to use the Colossus supercomputers to build orbital data centers composed of satellites launched by SpaceX, powered by xAI technology, to help meet demand for AI and the digital hubs that support it.
SpaceX filed regulatory documents last week for a planned initial public offering. "We have created distinct new markets across the space, connectivity and AI industries by building the integrated hardware and software infrastructure of the future," SpaceX said in a regulatory document filed on May 20.
The company added that "SpaceX's recent acquisition of xAI unites SpaceX's launch capabilities and global connectivity network with xAI's AI development capabilities. Specifically, we believe SpaceX's reusable rockets, scaled satellite manufacturing and operational expertise can enable the cost-effective and rapid deployment of massive AI compute satellite constellations … for orbital data centers."
SpaceX plans to launch its first data centers in space in early 2028. The plan calls for 1 million satellites to be placed in Earth's orbit. Amazon founder Jeff Bezos has also unveiled plans for his own space travel company, Blue Origin, to launch data centers into Earth's orbit.
Companies controlled by Musk have acquired additional properties in the Memphis area for xAI's use. Last year, xAI bought a former Duke Energy property in Southaven, Mississippi, with a direct connection to a nearby Tennessee Valley Authority natural gas plant via electric power transmission lines.