Elon Musk’s AI venture, xAI, is experiencing significant co-founder attrition, with the recent departures of prominent researchers Jimmy Ba and Tony Wu within days of each other. Ba, a distinguished professor at the University of Toronto, played a pivotal role in developing xAI’s Grok version 4 AI models, while Wu’s exit follows closely behind. These departures cast a shadow over xAI as it navigates a period of intense scrutiny and rapid integration with Musk’s aerospace giant, SpaceX.
The exodus of key talent comes at a critical juncture. SpaceX is reportedly on track for an Initial Public Offering (IPO) within the year, a move that would significantly increase its valuation. Documents reveal that the recent all-stock merger, which valued SpaceX at an astronomical $1 trillion and xAI at $250 billion, positions xAI as a substantial entity within Musk’s broader technological empire. This strategic alignment also saw xAI absorb Musk’s social media platform, X (formerly Twitter), in a similar all-stock transaction finalized in March 2025.
Adding to these internal challenges, xAI is currently facing a barrage of regulatory investigations across Europe, Asia, and the United States. These probes were triggered by the widespread creation and dissemination of non-consensual explicit imagery, commonly referred to as deepfake pornography, generated by the company’s Grok AI chatbot and image generator. The illicit content, derived from photographs of real individuals, including children, has drawn severe criticism and prompted immediate regulatory action.
Launched in 2023 with the ambitious objective of “understanding the true nature of the universe,” xAI was positioned as a direct competitor to established AI leaders like OpenAI and Google. However, the recent wave of co-founder departures, including those of Igor Babuschkin, Kyle Kosic, and Christian Szegedy, coupled with Greg Yang’s stepping back due to health reasons, raises questions about the internal stability and long-term vision of the company.
The company has not yet responded to requests for comment regarding these developments. The ongoing turbulence at xAI, juxtaposed with the high-stakes IPO of SpaceX and the mounting regulatory pressures, presents a complex landscape for Elon Musk’s burgeoning artificial intelligence enterprise. Investors and industry observers will be closely watching how xAI addresses these internal and external challenges as it seeks to fulfill its ambitious mandate.
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