In early February 2026, Elon Musk openly addressed a wave of staff departures at his artificial intelligence startup xAI. He insisted that the changes had nothing to do with rival companies stealing talent. Instead, Musk said these moves were part of a planned restructuring. This plan was meant to help the company grow and compete better in the fast-moving AI world.
This story has been widely discussed in tech news around the world since xAI recently merged with Musk’s space company, SpaceX. Now, the company is preparing for a major IPO. The talent departures including some co-founders sparked a lot of speculation about why people were leaving. Let’s break down what happened. Next, let’s consider why it matters and what this means for xAI’s future.
xAI is an AI startup founded by Elon Musk in 2023. It was created to build advanced artificial intelligence tools and compete with big players like OpenAI. Moreover, it is meant to challenge Google and others. Earlier this month, xAI finalized a merger with SpaceX. As a result, the combined company could be valued at around $1.25 trillion.
Soon after the merger, several high-profile staff members and co-founders announced they were leaving the company. Most notably, co-founders Tony Wu and Jimmy Ba confirmed their resignations. These departures left xAI with only half of its original founding team still in place.
Some industry observers and earlier stories suggested that rival AI companies might be “poaching” top talent from xAI meaning they’re actively recruiting employees away with better offers. In the world of AI, where engineers and researchers are in high demand, that kind of competition is not unusual. Furthermore, poaching often happens in fast-growing tech sectors.
But Elon Musk has publicly pushed back on that narrative. According to Musk, the departures at xAI were not primarily caused by other companies luring people away. Instead, he pointed to internal restructuring as the reason behind the exits.
At an all-hands meeting with employees, Musk explained that as xAI grows and integrates more with SpaceX, the company needs a new organizational structure. This structure makes it easier to execute big ideas and goals. For this reason, the restructuring has involved reorganizing teams and adjusting leadership roles. Unfortunately, it has also meant letting some positions go.
In his own words shared on social media platform X, Musk said the reshuffle was about making xAI “more effective at this scale.” Additionally, parting ways with certain staff was a necessary but difficult step in that process.
The wave of departures at xAI has been intense, especially for a young startup. Here’s a quick look at what’s been happening:
Some industry reports connect these departures with shifting priorities inside xAI especially after combining with SpaceX. As xAI focuses on ambitious goals like boosting efficiency, unifying AI teams, and preparing for a public offering, the internal culture and leadership expectations may have changed too.
Before Musk’s explanation, there were stories suggesting that AI competitors were luring talent away from xAI. In the previous year, Elon Musk even raised concerns about rival companies like OpenAI attracting former xAI engineers with big offers, hinting that this was part of a competitive “AI talent war.”
In that lawsuit, xAI alleged that some former employees had shared confidential information and joined competing teams. It even accused OpenAI of trying to steal trade secrets. However, hiring a person who used to work at another company isn’t illegal unless agreements were breached.
Still, this added fuel to speculation that xAI was losing staff because other companies were offering more stable work environments or higher pay. But Musk’s recent statements downplay those assumptions. In fact, he emphasized that restructuring not talent poaching was the real driver of the recent departures.
Musk described the restructuring as part of preparing xAI for its next phase. This includes becoming a public company and working closely with SpaceX on broader technological goals. In fact, the combined entity is expected to expand into areas like advanced AI models for language, image processing, and automated work tools.
This shake-up also means forming new teams focused on key product areas, such as:
Musk said these focused teams will help xAI move faster and more efficiently in a crowded market.
The pace of innovation in artificial intelligence is incredibly fast. Companies like OpenAI, Google, Anthropic, and Meta are all competing for talent and trying to lead the industry. Having a stable, talented team is crucial for any AI developer. This becomes even more vital for one planning to go public and challenge the biggest players.
When a startup loses key people, it can raise questions about internal strategy, leadership, and culture. But Musk insists that xAI’s restructuring isn’t a sign of weakness rather, it’s a decision made to support big future plans and make the company stronger.
From Musk’s point of view, the company is now more streamlined and better aligned with Big Goals:
With renewed leadership and a clear organizational structure, Musk seems confident that xAI can continue to grow even after these departures just not because rival companies stole talent. Instead, he frames it as part of the natural evolution of a fast-growing, ambitious tech startup.
In short, Elon Musk’s message is clear: the recent departures at xAI were driven by internal restructuring not other companies hiring away employees. While talent competition is real in the AI industry, Musk insists that the company’s recent changes align with a strategic vision. Consequently, the goal is to improve effectiveness and accelerate innovation as part of a bigger corporate future.
This distinction matters because it shapes how the public and investors view xAI’s stability, leadership, and long-term prospects. It is especially important as xAI prepares to enter the global tech spotlight.
