Elon Musk’s xAI Raises $10 Billion in Morgan Stanley-Led Deal to Build 2 GW AI Data Center with Gas Generators Amid Energy Concerns

Elon Musk's artificial intelligence company xAI has secured a total of $10 billion in funding, comprising a $5 billion debt deal led by Morgan Stanley and joined by Barclays, Mitsubishi UFJ, and UBS, alongside a separate $5 billion strategic equity investment. This capital injection will support xAI's plans to build the world's largest AI data center, including a million-GPU supercomputer expected to consume up to 2 gigawatts of power. To meet this substantial energy demand, xAI has obtained permits for 15 natural gas generators at its Memphis data center and is reportedly acquiring an entire power plant. Meanwhile, Amazon is developing a massive 1,200-acre data center complex in Indiana to support AI development in partnership with Anthropic, expected to consume 2.2 gigawatts of power and millions of gallons of water annually.

The growing electricity requirements for AI training have raised concerns about grid stability, with Hitachi Energy warning that surging power consumption by Big Tech must be managed by governments. In response, major technology firms are increasingly exploring nuclear energy as a clean and reliable power source to sustain continuous AI operations. Additionally, decentralized AI efforts are gaining traction, with thousands of nodes worldwide training models on local hardware, reducing reliance on centralized data centers.