Elon Musk's artificial intelligence company xAI is conducting talks to lease data centre capacity in Saudi Arabia as the company seeks to expand its infrastructure in countries with low-cost energy and political will, Bloomberg reported on July 17.

xAI is in preliminary discussions with two potential partners: Saudi-backed Humain AI, which is offering xAI capacity of several gigawatts, and another company building a smaller 200-megawatt facility that could be operational in the near term.

Despite Humain's ambitious offer, the project remains far from implementation. The company, backed by Saudi Arabia's Public Investment Fund, has not yet begun building much of the infrastructure it has pledged to create.

Any agreement with xAI would provide Musk with computing resources over several years rather than an immediate solution. In both cases, xAI would not own the facilities but would lease capacity to run AI models that require enormous computing power.

AI companies such as xAI, OpenAI and Meta are seeking to build or lease massive data centres to train and operate models that power chatbots like xAI's Grok.

If Humain succeeds in developing a multi-gigawatt data centre, it could become among the world's largest, as a one-gigawatt facility consumes enough energy to power approximately 900,000 homes annually.

Within Humain, the technical team led by Jeff Thomas is responsible for building infrastructure, whilst Saeed Al-Dabbas handles commercial negotiations.

This direction aligns with Musk's strategy of seeking locations for xAI infrastructure in places that offer cheap energy and abundant capital.

xAI recently closed a $10bn funding round split between equity and debt, with Musk writing on his X platform that the company has "sufficient capital."

Ross Nordeen, xAI co-founder and former Tesla employee, leads infrastructure negotiations and works as deal engineer and strategic officer for site and scope selection.

xAI's team is also studying data centre deals in the UAE and has contacted Abu Dhabi-based AI company G42. The company is studying opportunities in some African countries with low-cost energy and lower operating costs.

Saudi Arabia's abundant sovereign capital and availability of specialised processing chips make it the most attractive option currently.