Musk Restructures xAI After Co-Founder Exits and SpaceX Merger

Elon Musk announced Wednesday that his artificial intelligence venture xAI has undergone a reorganization following the departure of multiple co-founders and just days after its merger with SpaceX.

The restructuring, Musk said in a post on X, was designed “to improve speed of execution” and required “parting ways with some people.” He did not specify how many employees were let go or which exits were voluntary. Musk added that the company is now “hiring aggressively.”

Earlier this week, xAI co-founders Jimmy Ba and Tony Wu announced they were leaving the company. Their exits follow earlier departures from several founding members, including Igor Babuschkin, Kyle Kosic, Christian Szegedy and Greg Yang.

The leadership turnover comes at a pivotal moment. Last week, Musk confirmed an all-stock transaction in which SpaceX acquired xAI, creating a consolidated entity that now includes the social platform X and the AI chatbot Grok.

According to documents viewed by CNBC, the merger valued SpaceX at approximately $1 trillion and xAI at $250 billion post-transaction. Musk had previously merged xAI with X in 2025, bringing AI development and real-time social data under one umbrella.

IPO Pressure and Regulatory Scrutiny

The timing of the shake-up is notable. SpaceX is reportedly preparing for a public offering later this year, and tighter operational discipline could be aimed at presenting a streamlined AI and infrastructure strategy to prospective investors.

At the same time, xAI faces mounting regulatory scrutiny across the U.S., Europe and parts of Asia. Authorities are investigating whether Grok’s image-generation tools violated regional laws after users created and distributed non-consensual explicit images, including deepfake content involving minors.

The probes add complexity to what Musk has framed as a long-term vision to vertically integrate AI, space infrastructure and social distribution channels.

Musk founded xAI in 2023 with a stated mission to “understand the true nature of the universe,” positioning it as a challenger to OpenAI and Google in the generative AI race.

The reorganization suggests a shift from founding-team experimentation to scaled execution — particularly as the combined SpaceX–xAI entity prepares to operate under greater public-market and regulatory scrutiny.

Whether the overhaul signals internal turbulence or simply growing pains as Musk consolidates his AI ambitions into a trillion-dollar enterprise will likely become clearer as hiring accelerates and the IPO timeline sharpens.

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