In just two days, two prominent Chinese-American technology leaders have resigned consecutively, signaling a potential erosion of core strength within Musk's AI empire. On February 10, xAI co-founder Tony Wu posted on social media platform X, "It's time to start my next chapter," formally concluding his collaboration with Musk. However, the instability did not end there; merely a day later, another key technical figure, Jimmy Ba, also confirmed his departure. This development is particularly ironic, coming just days after Musk announced the completion of SpaceX's merger with xAI, valuing the new entity at over $1.25 trillion. Many expected this move to stabilize the company, but instead, it was followed by a collective exodus of core technical leadership. Over three years, xAI's founding team of twelve has seen more than half depart. As the company approaches a potential IPO, its founding team continues to disintegrate, posing a serious internal challenge to Musk's AI ambitions.

Public records indicate that before joining xAI, Tony Wu worked at Google for nearly two years and had earlier internship experience at OpenAI, making him an elite figure familiar with two leading AI companies. In 2023, he joined xAI as one of its twelve co-founders, reporting directly to Musk and leading the critical "reasoning" department responsible for developing the company's foundational models and core reasoning capabilities. His departure, as a founder deeply involved from inception and overseeing core technology, carries far greater significance than a typical executive exit. Jimmy Ba was responsible for xAI's research direction, AI safety—a sensitive area—and enterprise business development, all central to demonstrating an AI firm's technical reliability, social responsibility, and commercial value. Their resignations are not isolated incidents but part of a trend that began in mid-2024 with the departure of infrastructure lead Kyle Kosic to rival OpenAI. This was followed by exits from Google veteran researcher Christian Szegedy in February 2025, DeepMind alum Igor Babuschkin in August 2025, and co-founder Greg Yang in January 2026 for health reasons. Including Wu and Ba, half of the original twelve co-founders have left in under three years, a notably high attrition rate in the competitive AI talent market. Some observers note that Anthropic is the only major AI lab to have retained all its founders, while xAI's turnover exceeds even that of OpenAI during its turbulent periods. While departures have been framed amicably—with Wu thanking Musk for an "unforgettable journey" and Babuschkin reflecting on founding ideals—underlying structural issues are evident. Industry analysts suggest these exits may relate to Musk's assertive, high-pressure management style or frequent strategic reshuffles. For instance, weeks before Wu's departure, xAI reorganized, transferring his "post-training" responsibilities to co-founder Zhang Guodong, a move seen as a direct trigger. Deeper ideological conflicts may also be at play; Babuschkin's statement expressed pride in the team's "astonishing speed" but cited concerns over AI approaching superintelligent levels as his reason to pivot to AI safety, hinting at unease with xAI's trajectory. Some speculate that founders may have been uncomfortable with mergers first with social platform X and later with SpaceX.

Amid this turmoil, xAI has been a significant financial drain, likely driving the urgent merger with SpaceX. Leaked financial data show that in the first nine months of 2025 alone, xAI burned through $7.8 billion in cash, primarily on data center expansion, costly AI chips, and top talent salaries, with monthly losses nearing $1 billion. Revenue remained minimal, with a net loss of $1.46 billion in Q3 2025 against revenue of just $107 million. This unsustainable pattern led to SpaceX's all-stock acquisition of xAI in February 2026, valuing the combined entity at $1.25 trillion ($1 trillion for SpaceX, $250 billion for xAI). Given SpaceX's robust profitability (approximately $8 billion in 2025 profit), many analysts view the merger as a "financial bailout" for xAI—an emergency capital infusion disguised as a transaction. This marks xAI's second merger in under a year, following its integration into social media platform X in March 2025, reflecting ongoing organizational instability. One commenter quipped, "He [Wu] wasn't too keen on the idea of going to the moon before Mars, was he?" highlighting founder confusion over strategic shifts. The merger also clouds SpaceX's planned IPO, potentially as early as June 2026; while it could boost SpaceX's valuation to $1.5 trillion and raise up to $50 billion, investors must grapple with xAI's nearly $1 billion monthly losses. Balancing the narrative of a profitable rocket company subsidizing a money-losing AI venture will be a key challenge for Musk and the remaining team.

Beyond internal issues, xAI faces external crises from its flagship product, Grok, which may have contributed to talent disillusionment. Initially pitched as an alternative to ChatGPT's "excessive political correctness" aimed at "understanding the true nature of the universe," Grok quickly deviated, spreading misinformation on racial violence and generating pro-Nazi content. The most severe crisis involved an image-generation feature that allowed mass creation of deepfake pornography using real photos, including those of children, sparking global outrage. On January 26, 2026, the European Commission launched an investigation under the Digital Services Act to assess risks posed by Grok in the EU, with potential fines up to 6% of global annual revenue. Simultaneously, regulators in the UK and India initiated probes, while Paris prosecutors and Europol raided X's France office over criminal allegations including "complicity in disseminating child sexual abuse material." Musk and former X CEO Linda Yaccarino were summoned for hearings in April 2026. Grok's shift from a "free speech" advocate to a target of multinational legal scrutiny is deeply ironic. Industry watchers note that when products entangle in ethical and legal dilemmas, top talent may reassess the value and reputational risk of their work. Though no founder has cited this publicly, xAI clearly confronts a triad of product failures, regulatory pressure, and financial instability, raising the question not of why some leave, but why any remain.

With half its founders gone, heavy financial reliance, and products mired in regulatory issues, xAI's path forward is fraught. First, attracting top AI talent may prove difficult, as leading minds seek mission-driven work, not roles as "soldiers" in a commercial empire. While Musk claims development speed outpaces peers, the loss of core founders undermines confidence in technical continuity, often signaling deeper strategic or managerial problems. Second, the company's vision has grown ambiguous, shifting from cosmic understanding to anti-correctness and then scaling back due to scandals. The remaining six co-founders—Musk, Zhang Guodong, Manuel Kroiss, Zihang Dai, Toby Pohlen, and Ross Nordeen—must navigate these challenges under a CEO distracted by multiple ventures, with Zhang's authority bolstered after assuming some of Wu's duties. Following Wu's exit, xAI engineers posted urgent recruitment messages emphasizing "no office politics" to reassure staff. Meanwhile, online discussions highlight financial motives for departures; estimates suggest that with 0.5%–1% equity, Wu's stake could be worth billions post-IPO, giving founders ample means to "start new chapters." Supporters argue this reflects Silicon Valley's dynamic spirit, where talent mobility fosters innovation. In conclusion, xAI's saga blends genius, capital, risk, and human choices. While the departure of six co-founders may be natural turnover, as IPO looms, xAI must prove that beneath its trillion-dollar valuation, it can soar independently—not merely survive as a costly experiment propped up by rocket profits.