Elon Musk’s xAI Eyes Saudi Arabia for Data Center Expansion: What It Means for AI, Energy, and Global Tech Politics
In the fast-moving world of artificial intelligence (AI), infrastructure is becoming as important as algorithms. Behind every chatbot, recommendation system, and self-driving car sits enormous data centers running complex AI models. Elon Musk’s latest venture, xAI, is now looking to expand its reach globally—and Saudi Arabia may play a surprising role in that story.
According to reports from industry insiders, xAI is actively exploring deals to lease data center capacity in Saudi Arabia. This move would allow xAI to boost its AI operations in a country known for two things Musk cares about: affordable energy and government support for futuristic technologies.
While discussions are still in early stages, let’s unpack what’s going on behind these quiet talks, why it matters to global tech and energy industries, and how it fits into Musk’s broader AI and business ambitions.
What Is xAI?
Founded in 2023, xAI is Elon Musk’s artificial intelligence company aimed at building next-generation AI systems. Its most public product so far is Grok, a chatbot Musk describes as having a more “rebellious” personality compared to its rivals like OpenAI’s ChatGPT or Google’s Gemini.
Unlike his other ventures—Tesla (electric vehicles), SpaceX (space travel), or Neuralink (brain-computer interfaces)—xAI focuses strictly on software, but that software needs massive computing power. And that’s where these data center plans come into play.
Why Saudi Arabia?
You might wonder: why would a cutting-edge AI startup want to set up shop in Saudi Arabia?
The answer is energy, scale, and money.
Saudi Arabia has some of the world’s cheapest electricity, thanks to its vast oil and gas reserves and investments in renewable energy. Running AI data centers consumes an enormous amount of electricity. For reference, just one gigawatt of power—the scale mentioned in xAI’s talks—can supply energy to nearly 900,000 homes for a year.
Besides energy, Saudi Arabia’s government is keen to diversify its economy beyond oil. Crown Prince Mohammed bin Salman’s Vision 2030 plan has seen the kingdom invest heavily in AI, green technology, and tourism. By working with Saudi-backed firms, xAI can tap into capital and political support that might be harder to secure in more regulation-heavy regions like the United States or Europe.
The Two Saudi Proposals on the Table
xAI’s team is considering two options:
If built, this would be one of the largest data centers on Earth—more than enough power to train AI models far larger than Grok. However, there’s a catch: Humain hasn’t broken ground on much of its promised infrastructure yet. That means any deal with Humain would be a bet on the future, not an immediate solution.
In both scenarios, xAI wouldn’t own the data centers outright. It would lease capacity—basically renting server space. This keeps costs flexible and avoids tying up too much capital in real estate and construction.
Who’s Involved in the Deal-Making?
Inside xAI, several key players are driving these negotiations:
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Ross Nordeen: A founding member of xAI and former Tesla employee, Nordeen is reportedly leading infrastructure deals for the company. Industry insiders describe him as xAI’s top strategist when it comes to picking locations and scaling resources.
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Andree Jacobson: Another former Tesla executive, Jacobson helps lead the technical side of xAI’s infrastructure.
On the Saudi side, Humain’s data center team is led by Jeff Thomas, while Saeed Al-Dobas handles business negotiations. These names may not be as famous as Musk’s, but they’re central to shaping the future of AI infrastructure in the region.
Musk’s Broader Strategy: Chasing Cheap Power Globally
This Saudi move isn’t happening in isolation. Elon Musk has long sought affordable, large-scale power solutions for his tech businesses:
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Memphis Supercomputer: In the United States, xAI already operates a massive facility in Memphis housing its flagship supercomputer called Colossus.
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Hints at Expansion: Musk has publicly teased plans for a second U.S. facility and is rumored to be exploring locations in other low-cost power markets, such as Iceland or parts of Canada.
This approach echoes what other AI giants like Meta, Google, and OpenAI are doing—building data centers where it makes economic sense. The difference is Musk’s high-profile involvement in global politics and business, which sometimes complicates these deals.
Political and Regulatory Backdrop
One reason Musk may be looking outside the United States is growing regulatory scrutiny. U.S. lawmakers and federal agencies have increasingly raised concerns over data privacy, energy consumption, and tech monopolies.
In fact, the U.S. Department of Justice is currently pushing for parts of Google’s business empire, including its Chrome browser, to be broken up. Similar antitrust conversations surround AI.
By setting up infrastructure in Saudi Arabia, xAI could position itself as more globally diversified—less dependent on U.S. facilities and potentially less exposed to American regulatory risks.
There’s also Musk’s evolving relationship with U.S. politics. Though he has been close to former President Donald Trump, Musk’s ventures often clash with current government agencies on everything from space regulation to vehicle safety.
The Money Behind It
Earlier in 2025, xAI closed a massive $10 billion funding round, split evenly between equity and debt. Musk has publicly stated on his X platform that xAI now has “plenty of capital.”
But how that money gets used is still an open question. Investing in AI models is just one piece; the physical infrastructure is another. Given the rising costs of building AI data centers—running into billions of dollars for the largest facilities—leasing rather than buying is a financially conservative choice.
A Growing Trend Among AI Companies
xAI isn’t alone in looking for energy deals overseas. OpenAI, Meta, and even smaller startups are exploring international partnerships to secure compute power:
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OpenAI: Has discussed deals in the Middle East and Northern Europe.
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Meta: Operates data centers in regions like Denmark and Ireland.
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Anthropic: Another rising AI firm rumored to be exploring overseas expansion.
Saudi Arabia, with its vast resources and hunger for technological relevance, has emerged as a natural partner for these companies.
What’s at Stake?
The stakes are enormous—not just for Musk and xAI, but for the entire future of AI development.
As AI models grow larger and more powerful, they require more data, more electricity, and more cooling. Running advanced models like Grok 4, OpenAI’s GPT-5, or Meta’s next-generation LLaMA systems isn’t just about writing smart software. It’s about building and managing global-scale infrastructure.
In that sense, AI development is starting to look a lot like oil or electricity generation: dependent on geopolitics, energy markets, and global trade.
Final Thoughts: Why This Matters to Everyone
Even if you’re not personally interested in Elon Musk or Saudi Arabia’s business moves, this story touches on several issues relevant to everyday life:
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Energy Consumption: As AI tools become part of daily routines—from customer service bots to AI-generated content—their environmental impact will grow.
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Global Technology Shifts: The center of gravity for tech infrastructure is moving beyond Silicon Valley. Places like Riyadh, Reykjavik, and Bangalore are becoming important AI hubs.
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Privacy and Regulation: Where your AI-powered tools get processed affects everything from privacy laws to digital rights.
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Economic Opportunity: Countries willing to invest in tech infrastructure today could become the economic winners of tomorrow.
In the end, Elon Musk’s data center talks in Saudi Arabia aren’t just about servers and electricity. They’re about shaping the future of how, where, and by whom artificial intelligence gets built and deployed.
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