Musk shuts down xAI and folds it into SpaceX, admitting it was "not built right"
Elon Musk has dissolved xAI as an independent company, folding its staff and assets into SpaceX under a new division called SpaceXAI. The move follows a merger announced in February 2026 that valued xAI at $250 billion and SpaceX at $1 trillion — a combined $1.25 trillion entity. For anyone using Grok or watching the AI race, the organization behind the chatbot no longer exists in the form it was founded.
The exodus
Every one of xAI's 11 original co-founders had left by March 28, 2026, per The Next Web. Musk is the sole founder remaining. He acknowledged the scale of the failure publicly, telling the tech community that "xAI was not built right first time around, so is being rebuilt from the foundations up." Whether that admission explains the departures or follows from them, the practical result is the same: an entirely new leadership structure inside SpaceX now runs Grok development.
xAI will be dissolved as a separate company, so it will just be SpaceXAI, the AI products from SpaceX
— Elon Musk (@elonmusk) May 6, 2026
The Anthropic twist
The most striking detail in this restructuring is what SpaceX is doing with Colossus 1 — xAI's Memphis-based supercomputer, built for more than $1 billion and equipped with over 220,000 Nvidia GPUs including H100s, H200s, and GB200s. SpaceX is now leasing that compute capacity to Anthropic, the maker of Claude, according to Anthropic's own blog. That is a sharp reversal: Musk spent years publicly criticizing Anthropic and its backers, but now SpaceX is directly powering one of its main competitors.
Anthropic says the deal gives Claude access to significantly more compute, and both companies have framed it around shared ambitions in orbital infrastructure. The practical upshot is that Colossus 1 — originally built as xAI's competitive edge — is generating revenue for SpaceX by serving a rival AI lab.
What it means for Grok
Grok itself isn't going away. Development continues under SpaceXAI, and xAI's products remain live. But the company structure that built them is gone, its founding team has scattered, and its flagship compute asset is partly rented out to a competitor. CNBC reported the restructuring was framed internally around "speed of execution" — which reads less like a strategy and more like damage control after a mass departure. Whether SpaceXAI can stabilize Grok's roadmap under a rocket company's roof is the open question heading into the second half of 2026.
