SpaceX has installed senior Starlink executive Michael Nicolls to oversee xAI as Elon Musk pushes to improve the performance of the company’s rapidly built AI infrastructure, according to a new report from The Information.
The leadership change comes after several senior data-center executives departed in recent weeks and as questions emerge over whether xAI’s unusually fast and inexpensive construction strategy is creating reliability problems.
The Information reported that xAI’s Macrohard facility has relied heavily on temporary infrastructure, including mobile gas turbines, Tesla Megapack batteries and more than 100 mobile chillers. That setup has contributed to outages that interrupted AI-model training, according to a person involved with the project. Its uptime has reportedly remained well below an internal target of at least 99.9%.
SpaceX’s Cheap Data Center Strategy Faces a Test
The leadership shakeup matters because artificial intelligence has quickly become one of SpaceX’s biggest investment priorities.
SpaceX said xAI brought the first two computing clusters at its second data center online for roughly one-quarter of typical industry costs, although its disclosure did not detail exactly which expenses were included in that calculation.
The savings are increasingly important as spending accelerates.
SpaceX reported $7.8 billion of second-quarter revenue, nearly double the year-earlier level, while investing about $15.83 billion in AI infrastructure during the quarter. Its emerging AI revenue increased roughly 250%, even as the company remained loss-making.
That expansion includes massive external compute agreements. A $920 million-per-month Google compute deal gives Google access to roughly 110,000 Nvidia GPUs, while SpaceX has also leased Colossus capacity to Anthropic. The latter agreement carries payments of as much as $1.25 billion per month, although the contract contains cancellation provisions.
Musk Pushes Deeper Into Data Center Infrastructure
Rather than slowing expansion, Musk is also taking more of the data-center supply chain inside SpaceX.
The company is developing manufacturing capacity for gas-turbine blades and vanes in Texas, a move Musk said could shorten turbine deployment timelines by as much as 18 months. The effort comes as AI operators struggle with electricity constraints and long waits for power-generation equipment.
SpaceX is simultaneously pursuing the far more ambitious idea of putting AI computing infrastructure in orbit. The company has sought FCC permission for a system involving as many as one million satellites intended to function as orbital data centers. The strategy builds on the broader SpaceXAI orbital computing push.
Investors appear relatively calm about the latest leadership changes. SPCX was trading around $143.36 on September 1, slightly below its previous close of $143.69. The shares remain roughly 36% below their June record of $225.64 but have recovered sharply from an August low near $104.83.
That leaves the central question unchanged: SpaceX has shown it can build enormous amounts of AI compute unusually quickly. The leadership overhaul suggests Musk now wants to prove it can operate that infrastructure just as reliably.
