Elon Musk’s AI company xAI terminated about 500 employees from its data annotation team on the evening of September 12, 2025. The cut was roughly, a third of the team who creates the labels and prepares data to train up xAI's chatbot Grok.
As part of a larger strategy to change direction, Musk is focusing on creating specialist AI tutors instead of generalists, which would have made up the employees' roles. Those affected were informed by email as their employment ended immediately, although they will get paid through the end of their contracts (2 months) or through November 30, 2025.
xAI also shared that it will grow its specialist AI tutor team, 10 times larger and represent areas of STEM, finance, medicine, and safety. It is also actively hiring for these roles.
This development follows a series of executive operations changes at xAI, which include the departure of the CFO of the company, who resigned in late July 2025. These layoffs and changes in leaders at xAI signal an entirely new direction for their strategy on how to use AI and employ workers in the future.
