Tesla (TSLA, Financials) and xAI are expanding their artificial intelligence infrastructure, with Elon Musk confirming continued chip purchases from Nvidia and AMD. xAI has already deployed 200,000 GPUs at its Memphis-based Colossus facility, with plans for a tenfold expansion.
xAI's Colossus facility currently runs more than 200,000 GPUs. Musk said it is “the most powerful training cluster in the world right now” and announced plans to build a 1 million-GPU center nearby.
Musk acknowledged that xAI received priority GPU shipments over Tesla in 2024. Tesla's own Dojo supercomputer in Buffalo, New York, continues to train Autopilot and Optimus robotics software.
Environmental concerns are rising in Memphis, with reports of Clean Air Act violations linked to gas turbines used to power Colossus. These turbines emit nitrogen oxides tied to respiratory illness and ozone formation.
Musk forecast that while chips remain the bottleneck for AI now, a shortage of electrical generation capacity could emerge by mid-2026. He added that U.S. innovation leads China, despite China's higher infrastructure investments.
xAI spent $191 million in 2024 and another $36.8 million through February 2025 on Tesla Megapacks for energy storage. A potential merger between Tesla and xAI is not on the table for now but “not out of the question,” Musk said, adding it would require Tesla shareholder approval.
