SpaceX Cuts Grok Video Team: So Where Does Its $7.6B AI Business Get Its Money?
SpaceX has cut most of its team behind Grok Imagine, the AI tool that creates videos and images, with about 60 people losing their jobs in the past week.
Despite the layoffs, SpaceX's AI business is experiencing remarkable growth. The division generated $7.6 billion of SpaceX's $14.6 billion in revenue last quarter, an 830% increase from the previous year. The primary source of this income comes from deals renting computing power to AI developers such as Anthropic and Alphabet, rather than from Grok itself.
AI Revenue Sources
In the second quarter, AI solutions and infrastructure accounted for $2.19 billion of the AI unit's $2.56 billion total, with advertising contributing $367 million. SpaceX has signed $14.1 billion in cloud deals to date. In August, CEO Elon Musk stated that only about 10% of the company's computing power would be allocated to training Grok.
Grok's Competitive Position
Grok faces significant challenges in the competitive AI landscape. This week, Musk admitted that Grok 4.8 "is not as good" as Anthropic's Claude Opus 5.5, calling Opus "a masterpiece." Performance metrics show Grok ranked fifth among seven major AI assistants by web visits in May. In video rankings, Chinese companies dominated the top six spots, with ByteDance's Seedance 2.0 leading the pack.
Opus 5.5 is a masterpiece
Market Reaction
Investors showed minimal concern about the layoffs. SpaceX stock (SPCX) fell just 0.56% to $139.15 in early trading on Friday, briefly jumping toward $142 before reversing below Thursday's close of $139.94. The minimal market reaction suggests confidence in SpaceX's overall AI strategy despite the team reduction.
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