Hamartia Antidote
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xAI’s Colossus 2 – First Gigawatt Datacenter In The World, Unique RL Methodology, Capital Raise
Much has been written about xAI’s Colossus 1. The Memphis build belongs in the history books: the largest AI training cluster, erected from scratch in 122
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Much has been written about xAI’s Colossus 1. The Memphis build belongs in the history books: the largest AI training cluster, erected from scratch in 122 days. With roughly 200,000 H100/H200s and ~30,000 GB200 NVL72, it remains, today, the largest fully operational, single-coherent cluster (setting apart Google, master of multi-datacenter-training).
However, Colossus 1’s ~300 MW looks modest next to the Gigawatt-scale clusters under construction by OpenAI, Meta and Anthropic. Their hyperscaler partners are happy to leverage their balance sheet and win the market by throwing dollars at it.
Was xAI’s prowess a one-time wonder? Today we will publicize some data from our industry leading datacenter model over the last year that is accessible to clients. This is the our same proprietary data that called the Oracle deals many months ahead of the announcement.
Short answer: no. xAI is still squarely in the frontier-AI race and is positioned to leapfrog most rivals again on compute. By our estimates, its total datacenter capacity for a single training cluster will surpass Meta Superintelligence and Anthropic by Q3 2025. The datacenter capacity will be ready for the GPUs to be moved in to create the largest single datacenter in the world, yet again. xAI has to raise the capital for those GPUs, but they have the allocations from Nvidia to have it fully training large scale models early next year.
Elon came up with a new genius trick to beat rivals at time-to-market. Colossus 2 will be an even more impressive achievement than xAI’s first cluster. Let’s dig in.
The first half of this report will dig into the Colossus 2 prowess. The second half will discuss Grok models, our mid-to-long term thoughts on xAI, and the unique RL method xAI is using that may lead them to leapfrog OpenAI, Anthropic, and Google.
Colossus 2: from zero to 200MW in six months
The Colossus 2 project was kicked off on March 7th, 2025, when xAI acquired a 1m sqft warehouse in Memphis, and two adjacent sites totaling 100 acres. By August 22nd, 2025, we count 119 air-cooled chillers on site, i.e. roughly 200MW of cooling capacity. That’s enough to power roughly 110k GB200 NVL72. And an Elon tweet shows some racks were already installed in July.xAI built in six months what took 15 months for Oracle, Crusoe and OpenAI!
Colossus 2: in Tennessee, Mississippi… or both?
Things get more confusing once factoring-in a Greater Memphis Chamber statement in May that no turbines would be sited in Memphis. They’re not lying.Memphis and Tennessee have been getting a lot of pushback, so xAI’s genius move was to develop a Gigawatt-scale energy hub right across the border in Southaven, Mississippi. In mid-2025, the company acquired a former Duke Energy power plant in Southaven. Shortly after, Mississippi regulators granted xAI temporary approval to run gas turbines there for up to 12 months without a permit!
To transport and manage power generated by the Mississippi power plant, xAI is building infrastructure near Colossus 2. We show below the first deployment of Tesla Megapacks, as well as the Medium Voltage power lines connecting the two sites.
From 200MW to 1.1GW and Solaris Energy Infrastructure partnership
In Southaven, MS, xAI is moving at the pace of light. The discontinued power plant now sees seven 35MW turbines in operations.
To deploy faster than peers, xAI relies on rental turbine companies. NYSE-listed Solaris Energy Infrastructure owns a fleet of 600MW of gas turbines, of which ~400MW currently serve xAI. Musk’s firm weighs 67% of SEI’s 1700MW orderbook, i.e. 1,140MW. There are ~240MW on the Memphis Colossus 1 site, while the remaining 900MW will be owned by a Joint Venture owned at 50.1% by Solaris and 49.9% by xAI.
Source: Solaris Energy Infrastructure
As shown below, ~460MW are currently installed and in operations/under construction.
The newly formed JV already spent $112 million in capital expenditures in Q2 2025. After a slow Q3, spending will pick up again in Q4 2025 and Q1 2026. Solaris expects to have over 1.1GW of fully operating turbines for xAI by Q2 2027. There remains ~425MW available for contracting, and we think xAI will likely pull the trigger to get to over 1.5GW of total gross power. Solaris also appears to temporarily lease power generation capacity from third parties to deliver faster:
Wrong thread. GPT is not what this thread is about. It's about xAI Grok
