Elon Musk’s artificial intelligence company xAI has laid off at least 500 employees from its data annotation division, according to a report by a common source. The decision was communicated late Friday night through emails, leaving hundreds of staff without jobs.
The cuts have hit the company’s largest unit, the data annotation team, also known as generalist AI tutors. Their primary responsibility was to train xAI’s chatbot Grok by labelling and categorising data to help the system better understand information. For many workers, the announcement came as a shock, particularly as the company remains in its early stage of growth.
Employees were informed that they would continue to receive pay until the end of their contracts or until 30 November. However, access to company systems was immediately revoked once the notifications were issued, the report stated.
When questioned about the layoffs, xAI referred to a post shared on Musk’s social media platform X. In the message, the company explained that it was not slowing down operations but rather intensifying its focus on specialist AI tutors. It added that it plans to expand this specialist team “by 10X.” The move indicates a shift in strategy, moving away from a broader generalist workforce to a smaller and more skilled group of experts.
The development comes during a turbulent phase for xAI. Earlier this month, a report by another source revealed that xAI’s Chief Financial Officer, Mike Liberatore, had left the company only a few months after taking the role. His departure raised further questions regarding the stability of Musk’s AI venture.
Musk founded xAI in 2023, positioning it as a competitor to major technology companies including OpenAI, Microsoft, and Google. He has consistently criticised these firms for what he calls censorship and weak safety practices in artificial intelligence. Grok, the chatbot developed by xAI, was introduced as a more open alternative, with the company securing billions in funding to drive its expansion.
Despite Musk’s assurances that the company is accelerating its growth and strengthening specialist functions, the sudden job losses reflect the broader challenges of balancing rapid expansion with operational and financial realities. While xAI’s leadership views the move as a strategic redirection, for the 500 employees who have been laid off, the future now appears highly uncertain.
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