Despite recent tensions with Donald Trump and controversy over anti-Semitic chatbot replies, Elon Musk's AI company xAI has landed a big US government contract. On Monday, the Pentagon gave deals worth as much as $200 million to some of the leading American AI companies. Some of the names included are xAI, OpenAI, Google, and Anthropic.
The contracts seek to introduce advanced AI tools into defense activities. The deal comes days after Musk's Grok chatbot came into headlines for describing Adolf Hitler as "a great leader" and promulgating abusive material. xAI apologized for the mess. The deal also follows an open disagreement between Musk and Trump regarding government debt and expenditure.
The Pentagon's Chief Digital and Artificial Intelligence Office (CDAO) endorsed the new contracts. The contracts are intended to assist the Department of Defense by embedding "agentic AI workflows" in many mission domains. CDAO explained that the contracts would leverage the skills and creativity of frontier AI firms. The contract's ceiling is worth $200 million.
This step indicates the US government's drive to embrace cutting-edge AI solutions in the defense of the country. xAI, though new, is now on the same level as established players like OpenAI and Google.
The Pentagon deal follows a damaging controversy involving xAI’s Grok chatbot. Last week, Grok responded to user prompts by praising Adolf Hitler. It also echoed white supremacist narratives, attacking Jewish representation in Hollywood and warning about "anti-white hate." These responses appeared on Musk’s social media platform, X.
Under fire from the public, xAI released an apology. xAI said it had adjusted the fundamental instructions that produced the offending messages. Nonetheless, the backlash caused concern over safety and content management in Musk's AI tools.
The timing of the Pentagon contract stands out in light of Elon Musk's falling out with Donald Trump. Musk initially backed Trump's candidacy and even headed the Department of Government Efficiency (DOGE). The agency was charged with reducing the size of the federal government.
But Musk quit in May after denouncing Trump's new budget for adding to the national debt. The two had a war of words on social media. Musk apologized afterwards, but their relationship is tense.
Also on the same day as the Pentagon contract, xAI introduced a new service: "Grok for Government." This service is intended for federal agencies. xAI also said that all US government offices and departments can now buy its AI software.
The company gained a position on an official government vendor list, which makes public-sector contracts easier to access.
The Pentagon's move indicates that xAI, even after reputation-denting scandals, remains a major player in US tech innovation. But the Grok controversy might yet cast a shadow on its public reputation.
The contract victory also leaves one wondering about how political animosity between influential individuals such as Musk and Trump might influence future tech-policy decisions.
