SpaceX has placed senior Starlink executive Michael Nicolls in charge of its xAI data center operations, following a wave of departures among senior data-center executives. The leadership change, reported by The Information, comes as questions grow over whether the company’s unusually fast and inexpensive AI infrastructure build-out is creating reliability problems.
The xAI Macrohard facility has leaned heavily on temporary infrastructure, including mobile gas turbines, Tesla Megapack batteries and more than 100 mobile chillers. That makeshift approach contributed to outages that interrupted AI-model training, and uptime reportedly remained well below an internal target of at least 99.9%. Some SpaceX facilities in Tennessee and Mississippi reportedly operated for months without backup cooling or power, while proposed sites in Texas have faced delays.
Despite those problems, SpaceX has emphasized cost advantages, saying the first two computing clusters at its second data center came online for roughly one-quarter of typical industry costs, though it did not detail which expenses were included. The company reported $7.8 billion in second-quarter revenue, nearly double the prior-year level, and invested about $15.83 billion in AI infrastructure during the quarter. AI revenue rose roughly 250%, supported by large external compute deals: Google has an agreement worth about $920 million per month for roughly 110,000 Nvidia GPUs, and Anthropic has a Colossus lease carrying payments of up to $1.25 billion per month, with cancellation provisions.
SpaceX is also moving deeper into the data-center supply chain. Elon Musk confirmed the company is building a foundry in Bastrop, Texas, to manufacture gas-turbine blades and vanes, a move he said could shorten turbine deployment timelines by as much as 18 months. The company has also sought FCC permission for a system involving up to one million satellites intended to function as orbital data centers.
Investors remained relatively calm after the shake-up. SPCX traded around $143.36 on September 1, slightly below its previous close of $143.69, roughly 36% below its June record of $225.64, but sharply recovered from an August low near $104.83. The central question is whether Musk can make SpaceX’s rapidly built AI infrastructure operate as reliably as it was constructed.
