According to a Reuters exclusive, xAI's chatbot Grok has struggled to gain traction within the U.S. federal government, a blow that directly undercuts the AI growth narrative SpaceX has been using to bolster its initial public offering (IPO). SpaceX's IPO is widely regarded as the largest in history, with a significant portion of its valuation tied to promises of a "trillion-dollar AI services market" — and Grok sits at the center of that strategy. However, Reuters found, through interviews with seven federal employees, three contract specialists, and a review of government AI inventory records, that Grok has failed to win over one of the world's largest potential clients: the U.S. government. Records compiled by the White House's Office of Management and Budget (OMB) show that Grok has near-zero adoption among the majority of AI companies listed in the federal AI vendor directory. xAI did not respond to requests for comment.
Meanwhile, Grok's market performance is equally lackluster. Data shows Grok's downloads plummeted from over 20 million in January 2026 to roughly 8.3 million in April — a drop of nearly 60%. Its paid subscription conversion rate languishes at around 0.17%, a fraction of competitor ChatGPT's 6%+ paying user share. In a further sign of distress, SpaceX has reportedly leased some of its AI computing capacity to rival Anthropic, underscoring xAI's defensive posture in the AI race.
