Microsoft is joining some of its tech giant rivals betting on West Texas for data center campuses that support large-scale artificial intelligence workloads, as other regions struggle to provide the power and land needed for these multibillion-dollar investments.
Data center developer Crusoe said it plans to construct two buildings at "a new, dedicated AI factory campus in Abilene, Texas," as part of an agreement it reached with Microsoft. Plans include an onsite power plant expected to add 900 megawatts to the grid, according to a statement from Crusoe.
As demand for AI continues to grow, Microsoft is "focused on ensuring access to reliable and responsible infrastructure at scale," said Noelle Walsh, president of cloud operations and innovation at Microsoft, in the statement. “Crusoe’s Abilene facility reflects the type of large-scale infrastructure that supports next generation AI while contributing long term value to the local community."
The new campus for Microsoft is adjacent to where Crusoe is developing a major data center hub for Oracle and OpenAI as part of a venture called Stargate on more than 1,000 acres — a tract that's bigger than New York City's Central Park. Oracle and OpenAI were reportedly in talks with Crusoe for the buildings now being leased by Microsoft but ultimately chose not to move forward, according to Bloomberg.
Oracle declined to comment to CoStar News. OpenAI did not immediately respond to a media request from CoStar News.
Work has begun to clear the land to make way for Microsoft's buildings, with the first one scheduled for completion in mid-2027, according to the statement. Combined with Crusoe’s existing Abilene infrastructure as part of the Stargate project, the developer has a projected capacity of 2.1 gigawatts at the site, the statement said.
Crusoe co-founder and CEO Chase Lochmiller said by integrating 900 megawatts of new on-site power generation at the AI factory hub, the firm will continue building the industrial foundation for the nation's AI industry. Crusoe did not immediately share the sites or address information with CoStar News.
Data center hurdles
Crusoe's first AI project in Abilene, a small city about 150 miles west of Fort Worth, Texas, was part of the Stargate venture by Oracle and OpenAI and included two 100-megawatt buildings that were constructed and operational within a year.
In January 2025, OpenAI, Oracle and others announced the Stargate venture, with plans to spend $500 billion on new data centers and infrastructure as the U.S. looks to lead the world in the development of AI. The first and flagship Stargate project is the one unfolding in Abilene.
Crusoe's second phase as part of the Stargate project — adding six buildings to the campus for a total of 1.2 gigawatts of space — is expected to be complete by the end of this year.
Meanwhile, Meta is increasing its AI data center investment even farther west in El Paso, Texas. The parent company of Facebook announced plans last week to boost its spending in El Paso to more than $10 billion for a 1-gigawatt data center campus.
The project that broke ground last year had been facing opposition from community groups and local council members concerned about water and environmental impacts of the project. In Meta's announcement last week, the company said it will restore 200% of the water consumed by the El Paso data center to local watersheds.
Global data center investment hit a record $580 billion in 2025, more than was spent on oil for the first time, and expansion plans call for another $3 trillion in build-outs by 2030, according to a recent report from Colliers. AI data center projects face significant hurdles in obtaining electric power and other resources, and U.S. projects worth about $64 billion have been delayed or canceled since 2023 due to power shortages, permitting delays and supply bottlenecks, Colliers said.
The major projects underway in West Texas reflect the region's ability to accommodate large-scale, power-intensive data center development in part by leveraging natural gas resources into their plans like the Stargate project in Abilene, according to Colliers.
And it appears the Stargate-anchored data center campus in Abilene is holding onto its community support.
Abilene Mayor Weldon Hurt said the Microsoft addition to the Crusoe data center campus will further strengthen the local economy in the West Texas city, which is also growing with the business community.
Local news outlets are reporting that rental housing costs are on the rise in Abilene, a city with about 130,000 residents. In December, the Texas Demographer's Office estimated that Abilene has added 5,648 residents since its last official Census Bureau count in 2020.
"West Texas has become the Silicon Prairie for AI and the backbone for America’s most consequential innovation,” said Jodey Arrington, chairman of the House Budget Committee and U.S. Representative from the 19th Congressional District of Texas, in the statement from Crusoe.