Another AI unicorn has vanished.
Musk announces that xAI is being merged into SpaceX, renamed SpaceXAI, and will no longer exist as an independent company.
xAI was founded in 2023, with Musk assembling a team of 12 engineers poached from DeepMind, OpenAI, and Google, who built the first version of Grok in just four months. The company raised over $25 billion in funding and reached a valuation of $250 billion at its peak. Soon after, co-founders began leaving, regulatory investigations followed, SpaceX completed its acquisition, and restructuring ensued. From an independent company to complete dissolution, it took just three months.
The rise and fall of this company is a story of speed, ambition, and integration—and its conclusion points to a larger drama: SpaceX’s century-defining IPO.
Shut-down giant
xAI has disappeared.
On May 6, Musk issued two announcements on the same day. First: xAI will no longer exist as an independent company and will be merged into SpaceX, renamed SpaceXAI. Second: SpaceX will lease the entire Colossus 1 data center to Anthropic, delivering 220,000 NVIDIA GPUs and over 300 megawatts of computing power within this month.
Putting these two things together creates a somewhat unusual image.
xAI and Anthropic have been among the most direct rivals in the AI arms race over the past three years. Musk publicly criticized Anthropic on social media as “anti-Western civilization,” called Claude “misanthropic,” and claimed that victory was never within Anthropic’s reach. Yet, on the very day xAI announced its dissolution, he leased his most critical computing assets to the same company. Later, Musk explained on X that he had spent nearly a week in intensive discussions with Anthropic’s leadership and concluded, “They are extremely capable and genuinely care about doing things right—they didn’t trigger my evil detector.” He added: “SpaceX AI reserves the right to reclaim computing resources at any time if Claude’s behavior endangers humanity.”
This sounds like someone making excuses for a concession, but the underlying business logic is clear—xAI has fully migrated its training operations to Colossus 2; leaving Colossus 1 idle is a waste, so renting it out generates revenue and, meanwhile, helps position xAI as an "AI infrastructure provider" ahead of SpaceX’s IPO.
But no matter how you explain it, this combination represents a landmark moment for those following the AI industry. The name xAI has officially vanished from history. An AI company once valued at $250 billion and raised over $25 billion in funding disappeared entirely within just three months, from the announcement of its acquisition by SpaceX to its complete dissolution.
In fact, questions about xAI’s independence began the moment the acquisition was completed. In February 2026, SpaceX completed its acquisition of xAI in an all-stock transaction, valuing SpaceX at $1 trillion and xAI at $250 billion, for a combined valuation of $1.25 trillion. Immediately after the acquisition, xAI launched a major restructuring, with layoffs, organizational splits, and executive turnover occurring in quick succession. The departure of the co-founders happened even faster than outsiders expected. By the end of March, the last co-founder, Ross Nordeen, left the company, leaving Musk as the sole figurehead. In April, the CFO stepped down, and the VP of Starlink, a SpaceX subsidiary, was appointed as xAI’s new president. This is no longer the structure of a company with independent decision-making authority.
From TruthGPT to a trillion-dollar empire, then to an empty building with everyone gone
In March 2023, OpenAI released GPT-4. That same month, Musk signed an open letter calling for a six-month pause on the development of AI models more powerful than GPT-4, with a long list of prominent Silicon Valley figures also signing. But even as the letter was gaining traction online, Musk had already quietly registered a new company and begun poaching talent.
This company is xAI.
Elon Musk’s connection to OpenAI dates back to 2015. He was one of its co-founders, helping to build the company from the ground up alongside Sam Altman, with the original goal of creating a nonprofit AI research organization focused on human safety. In 2018, he stepped down from the board, with the official reason given as a strategic disagreement with the team. In the years that followed, he watched as OpenAI gradually transformed into a for-profit entity, formed a deep partnership with Microsoft, launched ChatGPT to global acclaim, and became precisely what he had originally hoped it would never become. This sentiment finally found an outlet in 2023.
He named the new company’s product TruthGPT, later renamed Grok, inspired by a term from science fiction meaning "deep understanding." He said xAI aims to build an AI that "maximally seeks truth," unbound by political correctness or compromised by commercial interests. He assembled a founding team of 12 researchers, poaching top experts in reinforcement learning and large models from DeepMind, OpenAI, Google, and Microsoft. Just four months after the team was assembled, the first version of Grok launched, available exclusively to paying X platform users—a speed rare even in the AI industry.
The capital market’s response to this story was far more enthusiastic than many expected. By the end of 2023, xAI completed its first external funding round of $1.35 billion. In mid-2024, it closed a $6 billion Series B round, with Andreessen Horowitz, Sequoia Capital, and Lightspeed all participating, pushing its valuation to $24 billion. By October 2025, after its latest funding round, the valuation had reached $50 billion, with total cumulative funding exceeding $25 billion. Meanwhile, xAI built the Colossus supercomputing center in Memphis, Tennessee, deploying 220,000 NVIDIA GPUs in a dense configuration, claiming it as one of the fastest-deployed AI supercomputers in the world. Musk has positioned it as xAI’s core weapon in its race against OpenAI.
On paper, this is a company racing ahead at high speed. But behind the rapid pace come problems that arrive just as quickly.
Grok’s biggest selling point is its "unrestricted" nature. Unlike ChatGPT and Claude, it is more willing to answer topics that other AIs refuse to address; the company even introduced a setting called "Spicy Mode" that allows users to unlock less restricted responses. This positioning quickly attracted a large number of users weary of AI’s "political correctness," but it also planted ongoing compliance risks for xAI. In 2025, Grok first issued severely distorted responses regarding the Holocaust, then at one point began interacting with users using language exhibiting white supremacist tendencies. More seriously, Grok was found capable of generating deepfake pornographic content based on real individuals’ photos, including minors. Regulatory investigations were launched by authorities across Europe, Asia, and the United States; Turkey’s court directly ordered a block on Grok, and multiple regulatory agencies demanded that xAI explain its safety mechanisms.
In response to these issues, Musk’s consistent explanation has been, “We’re fixing it,” but the rate at which public trust is eroding is clearly faster than the rate of repair.
Meanwhile, employee attrition within the company has been occurring at a pace difficult to explain through normal iteration. Of the 12 co-founders, all began departing gradually starting in the second half of 2025. Igor Babuschkin, an early core technical lead who previously worked on the AlphaGo project at DeepMind and was a key architect of xAI’s initial Grok model, quietly left in July 2025 to found his own venture capital firm. Shortly after, another co-founder, Manuel Kroiss, also departed. Following SpaceX’s acquisition of xAI, a restructuring was immediately launched, prompting several more co-founders to leave around that period. By March 2026, Zhang Guodong, head of the image generation team, and another co-founder had both left. Finally, Ross Nordeen, the last remaining co-founder, announced his departure in the same month. This means that within less than three years of xAI’s existence, all 12 founding members had departed—leaving only Musk behind.
When a company’s founding team leaves en masse, it often signals two possibilities: either there is a fundamental divergence in vision, or the company’s independence has become meaningless, making it pointless to stay. In xAI’s case, both factors likely play a role.
After the acquisition by SpaceX, the pace of restructuring has been much faster than outsiders anticipated. The original four business lines have been reorganized, the Chief Financial Officer stepped down in April, the VP of Starlink was appointed president of xAI, and xAI’s internal technical decision-making structure has begun to align with SpaceX’s management logic. Meanwhile, Grok’s training has been fully migrated to Colossus 2, and Colossus 1—the supercomputing center once considered a key strategic asset—has become an idle resource available for external rental.
Where a company shifts its focus often speaks louder about its true condition than any announcement.
When xAI was initially founded, Musk said its mission was to "understand the true nature of the universe." This statement carries the grand narrative style typical of Musk, but it hides a genuine business logic: he aimed to use xAI to integrate Tesla, SpaceX, and X into an AI-native ecosystem, with Grok serving as the brain of this ecosystem. In a sense, this vision has not failed—only the entity executing it has changed. AI remains the core strategy of Musk’s empire; Grok is still operational, and Colossus continues to expand. However, the responsibility for all of this now lies not with the independent company called xAI, but with a subsidiary brand named SpaceXAI.
The name has changed, but the ambition remains the same. However, none of the original twelve who set out together are still here.
Elon Musk's next move: an SpaceX IPO
On the day xAI disappeared, Musk's other message pointed toward a larger direction.
Colossus 1 has been fully leased to Anthropic; on the surface, this appears to be a compute transaction, but viewed within a broader timeline, it resembles a strategic positioning move. SpaceX is racing toward its most significant milestone to date—its IPO. According to current plans, the roadshow is set to launch on June 8, with the listing window likely falling between late June and early July, targeting a valuation between $1.75 trillion and $2 trillion. If realized, this would become the largest IPO in U.S. history. At this critical juncture, every card presented to the market matters greatly.
This transaction gives SpaceX a new narrative role. Previously, the market’s perception of SpaceX centered on rockets and Starlink, but in today’s AI-driven capital markets, relying solely on aerospace logic to justify its valuation leaves too much room for imagination. By leasing Colossus 1 in its entirety to Anthropic, SpaceX can declare before its IPO: we are also a computing infrastructure provider relied upon by the world’s top AI companies. Musk’s own explanation was straightforward—xAI’s training work has already migrated to Colossus 2; leaving Colossus 1 idle would be a waste, so it’s better to convert it into cash flow while simultaneously crafting a new story.
A longer-term strategy lies in space. Anthropic has expressed interest in orbital AI computing within the protocol, and both parties are exploring collaboration on orbital computing capacity in the gigawatt range. Elon Musk has been planning this direction for some time—Earth-based data centers face three bottlenecks: power, land, and cooling. Space offers nearly limitless solar energy and natural vacuum cooling. If this path succeeds, SpaceX will simultaneously become both a producer of AI computing power and the delivery infrastructure: Starlink will handle transmission, and Starship will transport the hardware into orbit, creating a fully self-contained system. This is a bet that may take a decade to realize, but it provides a sufficiently grand narrative framework for an IPO valuation.
The integration of xAI is not a burden but an enhancement under this logic. Grok now runs directly on Tesla’s vehicle systems, xAI’s prior U.S. Department of Defense AI contract has been transferred to SpaceX as part of the merger, and the conditional acquisition agreement for Cursor has also been incorporated. AI, space, defense, and autonomous driving are increasingly interlocking in Musk’s vision.
xAI has completed its journey as an independent company. The next chapter will unfold on a larger stage.
This article is from the WeChat public account "Rongzhong Finance" (ID: thecapital), authored by Lü Jingzhi.