Elon Musk’s xAI is developing the Colossus 2 supercomputer, aiming to outpace competitors Meta and Anthropic in compute power by 2025. However, a Semianalysis report indicates that OpenAI will maintain a significant lead in overall computing capacity. Colossus 2 has secured GPU allocations from Nvidia and started construction in March 2025 in Memphis, Tennessee, where a gigawatt datacenter was rapidly established. To avoid local opposition to gas turbines, xAI shifted power generation to a former Duke Energy plant in Southaven, Mississippi. Additionally, a partnership with Solaris Energy aims to provide over 1.1 gigawatts of turbine capacity by mid-2027. Despite the project’s massive investment needs, approximating tens of billions, dependence on external capital remains high. xAI grapples with internal talent retention issues due to Musk’s demanding work culture, while its API, Grok 4, struggles against competitors in performance and adoption, hindered by past controversies surrounding Musk’s influence.
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