Elon Musk has spent years positioning Grok as the “truth-seeking” alternative to ChatGPT. The US government, apparently, wasn’t looking for that particular kind of truth.
A Reuters investigation reviewed more than 400 examples of federal AI use where specific vendors were named. Grok or xAI appeared in exactly three of them. For context, OpenAI’s tools, including ChatGPT and Microsoft Copilot, showed up in 234 cases. Google’s Gemini appeared in 33. Anthropic’s Claude landed at 26.
Rock-bottom pricing, rock-bottom results
The lack of traction is especially notable given how aggressively xAI priced its way into the government market. A General Services Administration agreement signed in September 2025 made Grok available to federal agencies at $0.42 per organization, with the contract running through March 2027.
To put that in perspective, OpenAI’s access costs $1 per year per agency. Grok undercut even that bargain-basement price by more than half. And still, almost nobody bought in.
The three federal use cases that did involve Grok were decidedly unglamorous: basic document drafting and social media management.
A $250 billion bet riding on a chatbot few people use
This adoption gap takes on a different dimension when you consider the corporate structure surrounding Grok. In February 2026, xAI was acquired by SpaceX in an all-stock deal valued at $250 billion. The combined entity is reportedly worth approximately $1.25 trillion, and both companies are being positioned for what could be the biggest IPO in history.
SpaceX has real revenue from launch contracts, Starlink subscriptions, and defense work. xAI, on the other hand, now needs to demonstrate that Grok can compete in the enterprise and government markets that drive recurring AI revenue.
What this means for investors
The federal AI market is a leading indicator of enterprise trust. Government agencies are notoriously conservative buyers. When they don’t adopt a product, even at $0.42 a pop, it signals the opposite of a security, reliability, and functionality endorsement.
OpenAI has a dominant position with 234 federal deployments. It has partnerships with Microsoft baked into existing government IT infrastructure. Google and Anthropic have their own institutional relationships and proven track records. Grok is starting from near-zero in a market where incumbency matters enormously.
A $250 billion valuation for xAI implies massive future revenue growth. Three federal use cases out of 400 is the kind of number that shows up in analyst reports with a red flag next to it.