Musk’s xAI in Talks With Saudi’s Humain on Data Center Deal

BradenBusiness2025-07-177520

(Bloomberg) -- Elon Musk’s artificial intelligence startup, xAI, is in discussions to lease data center capacity in Saudi Arabia, according to people familiar with the matter, part of an effort to expand its infrastructure in regions offering cheap energy and political goodwill.

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The company is in early talks with two potential partners: Humain, a Saudi-backed artificial intelligence firm offering xAI several gigawatts of capacity, and another company building a smaller but more immediately available 200-megawatt facility, the people said, asking not to be named discussing private talks.

The Humain proposal, while massive in ambition, remains distant. While the AI company is backed by Saudi’s Public Investment Fund, the firm has yet to break ground on much of the infrastructure it’s pledged to build. Any arrangement with xAI would offer Musk computing resources years down the road instead of being a near-term solution.

By contrast, the other potential partner is already working on a 200-megawatt facility, one of the people said, making it a more realistic short-term option for xAI. In both cases, xAI would not own the facilities but instead rent capacity — essentially leasing space in the data centers to power its compute-intensive AI models.

Representatives for Elon Musk, xAI and Humain didn’t respond to requests for comment.

AI companies like xAI, OpenAI and Meta Platforms Inc. are building or leasing massive data centers to train and run the AI models that power chatbots, like xAI’s Grok. Those data centers are expensive to build and operate and use immense amounts of power. If Humain succeeds in developing a multi-gigawatt data center, it would likely be one of the largest in the world. A one gigawatt facility, for example, consumes the same amount of energy used to power nearly 900,000 homes annually, according to Carbon Collective.

“It makes a lot of sense. As power demand goes way up, you’re going to need to see some balance between the cost of running these data centers with the cost of powering them,” said Kathryn Huff, who served as a top administrator at the Energy Department’s nuclear office under US President Joe Biden and is now at the University of Illinois at Urbana-Champaign. “I immediately think of countries that might build new nuclear as options for that,” she said on Bloomberg Television Wednesday in response to the news of xAI’s talks.

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Inside Humain, a technical team led by Jeff Thomas is responsible for building the data center infrastructure, while commercial negotiations are being handled by Saeed Al-Dobas. The project may tie back to Saudi Arabia’s earlier investment in xAI, which was part of a broader effort by Saudi royal Alwaleed bin Talal to deepen ties between the kingdom and Musk’s ventures.

The potential Saudi move fits a broader trend for Musk, who is exploring infrastructure for xAI where power is cheap and capital is abundant, one of the people said. The exploration comes amid heightened geopolitical and commercial tensions in the US, where Musk has clashed with lawmakers and regulators despite spending much of this year closely advising President Donald Trump. Musk has already built a massive data center facility in Memphis, which houses a supercomputer called Colossus, and has publicly teased plans for a second facility nearby.

Musk and xAI recently closed a $10 billion funding round split equally between equity and debt, and Musk posted on his X social platform last week that the startup has “plenty of capital.” But the mechanics of how and where it deploys that capital are still taking shape.

Internally, xAI founding team member and former Tesla Inc. employee Ross Nordeen is driving these infrastructure negotiations, functioning as xAI’s key dealmaker and strategist for location and scale, according to people familiar with the company. While former Tesla and X executive Andree Jacobson is helping lead the technical side at xAI, Nordeen is widely seen as the “Omead” figure inside xAI — a reference to former Tesla employee and Musk confidant Omead Afshar.

The xAI team is also considering the UAE for data center deals has been in contact with Abu Dhabi-based AI firm G42, one of the people said. G42 declined to comment. The company has weighed data center deals in some countries in Africa as well that have access to cheaper energy and operating costs, two of the people said.

Still, Saudi Arabia’s abundance of sovereign wealth and access to specialized chips make it the most attractive option, two of the people said.

--With assistance from Omar El Chmouri.

(Adds nuclear expert’s comments in seventh paragraph)