xAI, the artificial intelligence (AI) firm behind the Grok chatbot, has gained little traction among U.S. government agencies, despite being available to them for months. The lack of growth could not have come at a worse time for xAI founder Elon Musk. His aerospace company, SpaceX, is set to debut publicly in June, with its long-term strategy tied to xAI’s promise to acquire a share of the multi-trillion-dollar AI market.
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Grok Struggles to Gain Ground in Washington
Musk’s Grok chatbot has failed to gain meaningful adoption among U.S. government agencies, as federal data show a stronger preference for its AI rivals. According to reports, there are more than 400 documented examples of AI use across U.S. agencies. However, only three of those involved Grok or xAI’s technology.
In comparison, OpenAI accounted for 234 identified government AI use cases, including AI tools, ChatGPT, Codex, and Microsoft (MSFT) Copilot integrations. At the same time, AI products linked to Google (GOOGL) and Gemini appeared in 33 examples, while Anthropic’s Claude chatbot appeared in 26 use cases before later being blacklisted by the Trump administration.
Grok has been available to federal agencies for roughly eight months at just 42 cents per agency. That low-pricing strategy is commonly used by major tech firms in hopes of securing long-term government contracts later. However, the extremely low subscription fees have done little to drive adoption.
Now, analysts warn that low adoption rates might affect Grok’s ability to compete with more established AI systems that have already gained traction across federal agencies.
Weak Adoption Clouds SpaceX’s AI Growth Narrative
Grok’s slow adoption is becoming even more concerning as SpaceX has positioned AI as a major part of its future growth strategy ahead of its expected IPO.
In recent SEC filings, SpaceX said that AI services for enterprises and large firms could present a market opportunity worth up to $26.5 trillion. That AI narrative has driven the anticipation around SpaceX’s estimated $1.75 trillion valuation.
However, the latest federal usage data suggests Grok is still far behind its major competitors within the AI sector. This raises questions about whether the xAI will be able to support SpaceX’s long-term goal. The concern is even more pressing, as the rocket firm’s IPO filing revealed that xAI’s merger and Musk’s AI ambitions have already cost SpaceX billions of dollars.
What Is the Expected IPO Price for SpaceX?
SpaceX shares are projected to range from roughly $400 to $1,200 per share, depending on its final IPO valuation. The company is expected to launch its IPO this June, targeting a valuation between about $1.5 trillion and $1.75 trillion while potentially raising more than $75 billion. For more information on SpaceX ahead of its IPO, visit the TipRanks Private Company Center.
