xAI Fires 500 AI Trainers in Strategy Shift

Elon Musk’s AI startup xAI has laid off more than 500 employees from its data-labeling division, the team responsible for training the company’s Grok chatbot. The move reflects a sharp shift in strategy, as xAI pivots from generalist AI tutors to a larger, more specialized workforce.

According to internal emails reviewed by Business Insider, staff were informed late Friday evening that their roles were being eliminated. While employees will continue to receive pay until the end of their contracts or through November 30, system access was cut immediately on the day notices were issued.

“After a thorough review of our Human Data efforts, we’ve decided to accelerate the expansion and prioritization of our specialist AI tutors,” the memo stated. “As part of this shift, we no longer need most generalist AI tutor positions.”

Shortly after the layoffs, xAI announced on X that it plans to expand its team of specialized AI trainers tenfold, underscoring its ambition to refine Grok’s development through more targeted expertise.

The layoffs come amid other turbulence at the company. The Wall Street Journal reported that CFO Mike Liberatoreresigned in July after just a few months in the role. A former Airbnb executive, he played a key part in raising $10 billion in debt and equity financing, nearly half of which was backed by Musk’s SpaceX, and in pushing forward new data center projects in Memphis, Tennessee.

The sudden restructuring and leadership changes highlight the challenges xAI faces as it seeks to position itself against rivals like OpenAI, Google DeepMind, and Anthropic in the highly competitive AI landscape.