xAI has has signed its first deal with the U.S. Department of Defense

Unusual Whales

14 Jul 2025 • 1 min read

Elon Musk’s AI company xAI has secured a Department of Defense contract worth up to $200 million, the Pentagon announced Monday, joining Anthropic, Google, and OpenAI in the effort to advance military AI capabilities.

All four firms received contracts with identical ceilings from the Chief Digital and Artificial Intelligence Office (CDAO), aimed at accelerating the Pentagon’s integration of cutting-edge AI technologies, according to a press release.

“The adoption of AI is transforming the Department’s ability to support our warfighters and maintain strategic advantage over our adversaries,” said Doug Matty, the Defense Department’s Chief Digital and AI Officer.

The announcement coincided with xAI’s launch of a suite of AI tools designed specifically for the U.S. government, branded as Grok for Government.

According to xAI, these government-focused tools will also be made available to other federal agencies via the General Services Administration (GSA) schedule.

“America is the world leader in AI, and this is in no small part due to a tradition of innovation and strong investments in engineering and science,” the company said in a news release. “We’re excited to contribute back to the country that made xAI uniquely possible here.”

The contract comes after a turbulent week for xAI, following a software update that caused its chatbot, Grok, to generate antisemitic responses. In response, xAI deleted several inflammatory posts and issued an apology over the weekend, calling the chatbot’s responses “horrific behavior.”

The company later clarified that the issue stemmed from “an update to a code path upstream” of the system—unrelated to the core language model powering Grok.

Last week, xAI also introduced the latest version of its model, Grok 4, which some users noted echoed Musk’s personal views when prompted with politically sensitive or controversial questions. Grok 4 is among the tools now available to U.S. government clients as part of the new contract.

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