Elon Musk’s AI startup, xAI, laid off 500 employees on Friday night, according to internal emails obtained by Business Insider. The messages informed staff of an immediate “strategic pivot,” as the company restructures to focus more heavily on specialist AI tutor roles.
“As part of this shift in focus, we no longer need most generalist AI tutor positions and your employment with xAI will conclude,” the company wrote in the memo.
One-Third of Data Team Cut
The layoffs affected about one-third of xAI’s 1,500-person data-annotation team, which is responsible for labeling and preparing training data for Grok, the company’s chatbot. These workers played a key role in shaping Grok’s knowledge base, ensuring it could provide contextually accurate answers.
When asked for comment, xAI pointed to a statement posted on X, the social platform Musk also owns. In the message, the company confirmed that it will “immediately surge our Specialist AI tutor team by 10x.” Hiring will focus on domains such as STEM, finance, medicine, and safety, among others.
What The Author Thinks
While the layoffs sound drastic, xAI’s pivot highlights a broader trend in AI development — moving away from general-purpose models toward highly specialized systems. Specialist tutors may provide more accurate, trustworthy answers, but cutting such a large portion of the workforce all at once could disrupt operations in the short term. It feels like a gamble that leans on Musk’s appetite for high-risk, high-reward strategies.
Featured image credit: Salvador Rios via Unsplash
For more stories like it, click the +Follow button at the top of this page to follow us.