• Elon Musk’s xAI is losing multiple co-founders after coding division underperformance and ongoing management overhauls.
• Meta plans layoffs affecting up to 20% of staff to offset AI infrastructure costs and boost efficiency.
• AI-driven restructuring is reshaping staffing priorities across major tech companies in the U.S. and globally.

xAI

Elon Musk’s xAI and Meta are both navigating waves of job cuts as AI priorities collide with performance and cost pressures. At xAI, several co-founders have left following concerns about the coding division, while Meta is preparing layoffs that could impact up to 20% of its workforce. 

Both companies are restructuring to streamline operations and improve efficiency, reflecting broader trends in tech as AI systems reshape staffing and investment decisions.

At xAI, co-founders Zihang Dai and Guodong Zhang recently departed, leaving just two of the original eleven in place. Additionally, Musk brought in specialists from SpaceX and Tesla to audit staff work and improve project quality.

A key focus has been the coding product Grok, which struggled to gain traction due to poor data quality, slow performance, and what Musk referred to as “vibe coding” problems.  The product lagged behind competitors such as OpenAI’s Codex and Anthropic’s Claude Code, failing to attract paying users or businesses. 

 The Financial Times reports that employees are complaining that constant restructuring is destroying morale. Moreover, some researchers have left due to burnout or better offers from rivals. 

This has left the AI startup many roles to fill with recruiters starting to offer higher financial terms to candidates previously rejected.

Meta

Meta’s layoffs reflect similar pressures. The company plans to cut thousands of roles to offset costly AI investments, including a USD 600 billion plan to expand data centers through 2028. 

Reuters reports that sources indicate the company could cut up to 20% of its nearly 79,000 employees, marking the largest downsizing since the 2022-2023 “year of efficiency” restructuring. 

CEO Mark Zuckerberg has emphasized generative AI, recruiting high-profile talent with multi-million-dollar packages. Setbacks with Llama 4 and the Avocado superintelligence model illustrate the ongoing challenges of scaling AI at the enterprise level.

These moves at xAI and Meta mirror a wider trend in tech. Amazon and fintech company Block have also cut thousands of roles, citing AI’s growing capacity to handle tasks that once required large teams. Analysts suggest these developments signal a shift where AI-driven productivity will increasingly shape workforce planning and investment priorities.