The announcement comes as xAI faces scrutiny over its data center projects in the Memphis area. The NAACP and the Southern Environmental Law Center have raised concerns over air pollution generated by xAI's supercomputer facility located near predominantly Black communities in Memphis.
A petition by the Safe and Sound Coalition, a Southaven group opposing xAI's developments, calls for shutting down xAI's operations in the area and has received more than 900 signatures as of Thursday afternoon.
xAI did not immediately respond when asked for comment about environmental concerns.
A fact sheet released by the Mississippi governor's office said environmental responsibility is a “core commitment” for xAI.
During the announcement, Reeves personally thanked Musk. Reeves predicted the investment would bring hundreds of permanent jobs to the community, thousands of indirect subcontracting jobs, and tax revenue to support public services.
Under the incentives for data centers passed in 2024, the state will waive all sales, corporate income and franchise taxes on the xAI development. Saving sales taxes on the computing power that xAI is purchasing would likely be worth a substantial amount of money, but the Mississippi Development Authority did not immediately respond to The Associated Press' questions about how much tax revenue Mississippi will give up.
DeSoto County and the city of Southaven have also agreed to allow substantially reduced property taxes.
xAI is expected to begin data center operations in Southaven next month.