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Elon Musk’s AI company, SpaceXAI, is laying the groundwork for at least one new large-scale data center in Texas, three people with knowledge of the effort said. Such a move could substantially expand SpaceX’s AI computing capacity outside its existing data center hub in Memphis, Tenn.

An expansion could position SpaceXAI to be a major cloud provider, as its existing AI business has struggled to gain traction and the company has been striking a series of deals to rent capacity to outside companies.

SpaceXAI in recent months has explored several potential data center sites in Texas, two of the people said. It has discussed various approaches to the expansion, the two people said, including setting up multiple data centers both by developing from scratch and by retrofitting an existing warehouse, similar to how SpaceXAI repurposed a former manufacturing facility for its first Memphis data center.

The goal is an expansion in Texas on a similar or greater scale to the company’s existing facilities in the Memphis area, one of the people said. SpaceX says it has around 1 gigawatt of compute capacity between two operating data centers, with hundreds of thousands of Nvidia graphics processing units installed.

SpaceXAI has already sent some of its existing data center staffers to Texas in preparation for an expansion there, two people said. The company was hiring for a data center development lead last month in Austin and Bastrop, Texas, to oversee data center installations and provide support with matters including “identifying prospective properties of interest, negotiating lease and own acquisitions,” according to the listing. And earlier this month, SpaceX posted job openings for temporary roles to support its “data center construction, expansion, and operations” in locations including Conroe, Texas.

SpaceX has touted its ambitions to one day launch and operate a big network of orbital data centers, but its AI infrastructure expansion is for now very much earthbound. The company has said it may continue to expand terrestrial data centers beyond its existing facilities, but it has disclosed little publicly about where exactly it plans to add more AI computing capacity.

Further expansion could extend its already heavy spending on AI infrastructure. SpaceX’s AI-related capital expenditures jumped to $7.7 billion for the first quarter, roughly triple the number for the same period a year earlier. Ahead of its June initial public offering, Morgan Stanley analysts projected SpaceX would burn $120 billion in 2026 and 2027 combined, due largely to AI-related capital expenditures.

Supermicro CEO Charles Liang said on X in June that the company was helping SpaceXAI build “another new Gigawatt AI datacenter” within a year, though he did not specify where the project would be located. The AI server maker has previously touted its role supplying SpaceXAI with Nvidia-based servers and cooling equipment.

The timeline for how quickly SpaceX could get new data centers up and running is unclear. Representatives for Conroe, Texas, did not respond to multiple requests for comment. SpaceX did not respond to a request for comment.

SpaceX had touted its ability to rapidly add data center capacity as a key advantage for its AI business in the run-up to its IPO. But its own Grok offerings have struggled to gain traction with business customers, prompting Musk to overhaul the company’s AI product strategy in recent months.

In June, SpaceXAI announced deals to lease large parts of its compute capacity to other companies including Anthropic and Google. This fresh source of AI revenue comes on the heels of SpaceX burning billions of dollars in cash in the first quarter, due largely to heavy AI capital expenditures.

Still, Musk has said SpaceXAI can take back capacity if needed. SpaceX has also agreed to a $60 billion deal to acquire AI startup Cursor, which is aiming to broaden beyond its coding roots and develop leading general-purpose models by the end of this year.

SpaceXAI has dramatically expanded its data center workforce over the past year, adding more than 40 new hires to its Colossus team, according to LinkedIn data. The AI unit has also brought in SpaceX employees to assist with its data center operations following the companies’ February merger, one person familiar with the work said.

SpaceXAI has been exploring a potential Texas data center expansion for several months, one person said. The company has faced a series of reorganizations and leadership churn over the past year. Notably, xAI co-founder Ross Nordeen left the company in March. He had overseen the company’s data center build-out and frequently updated Musk on its progress, two people said.

SpaceXAI President Michael Nicolls appointed new leadership in early April, telling staff in a memo that Jake Palmer would lead physical infrastructure and Daniel Dueri, director of software engineering at SpaceX, would lead compute infrastructure.

The AI business has so far relied heavily on natural gas turbines to supplement available grid power and power its existing data centers. It has installed dozens of mobile turbines in Tennessee and Mississippi, and it is developing a permanent gas-fired power plant in Mississippi through a joint venture with Houston-based Solaris Energy Infrastructure.

The company also has started work on further expansion in the Memphis area, including a third data center. Late last year, SpaceXAI purchased an 810,000-square-foot warehouse near its other data centers just across the state line in Mississippi.

But SpaceXAI has faced backlash in Memphis from local residents, politicians and environmental groups over its use of gas turbines as well as other issues including water use. Amid cost cutting earlier this year, the AI unit delayed work on a $80 million facility intended to recycle wastewater from the data centers and other industrial sites.

SpaceXAI has also sent staffers to Florida as well as Texas in recent weeks, one of the people said. The company posted data center roles for Jacksonville, Fla., in addition to Texas in recent weeks.

A spokesperson for the city of Jacksonville said last week that the city was not aware of any plans for a data center and had not had any communications with SpaceXAI. The spokesperson did not return requests for comment this week.

Musk and his companies have existing ties to both areas, with SpaceX and Tesla jointly building a semiconductor manufacturing facility in Grimes County, near Conroe. And Musk acquired Jacksonville-headquartered power generation provider APR Energy in May, a Federal Trade Commission filing showed.

APR Energy operates in several states where SpaceXAI has set up data centers, including Tennessee, Mississippi and Texas, according to business records with the states. Musk’s AI startup has purchased turbines from APR Energy in the past, one of the people said.