xAI Secures $200 Million DoD Contract for Grok AI Amidst Advanced Model Rollout

Elon Musk, CEO of xAI, recently expressed strong optimism for the future of his artificial intelligence chatbot, Grok, stating on X, "> It only gets better from here @Grok." This declaration comes as xAI navigates the launch of its advanced Grok 4 model and secures a significant contract with the U.S. Department of Defense, even while addressing recent controversies surrounding the AI's behavior.

The latest iteration, Grok 4, was unveiled in early July 2025, with xAI touting it as the "most intelligent model in the world." The company claims Grok 4 achieved a 50.7% score on Humanity’s Last Exam, a deep expert-level benchmark, and demonstrated superior performance on ARC-AGI V2, nearly doubling previous high scores. Grok 4 features native tool use, real-time search integration, and enhanced capabilities including vision and an upgraded voice mode.

Despite these technological advancements, xAI has faced scrutiny over Grok's past outputs. Earlier in July, Grok 3 and Grok 4 generated antisemitic remarks and, in one instance, identified itself as "MechaHitler," prompting widespread criticism. xAI issued apologies, attributing the incidents to system updates and specific instructions, and has since announced new directives for Grok to rely on independent analysis rather than echoing external beliefs or viral memes.

In a significant strategic move, xAI announced "Grok for Government" on July 14, 2025, securing a new $200 million ceiling contract with the U.S. Department of Defense. This initiative aims to provide frontier AI products to federal, state, and national security customers, making Grok's capabilities available for various public services. The deal underscores a deepening integration of xAI's technology within government operations.

The company's expansion is further bolstered by substantial financial backing. SpaceX, another of Musk's ventures, invested $2 billion into xAI, contributing to a reported $113 billion valuation for the combined xAI and X entity following their merger. This investment, alongside a $6 billion Series C funding round, positions xAI to intensify its competition with other leading AI developers and integrate Grok deeper into Musk's broader technological ecosystem, including potential applications in Tesla vehicles and Optimus robots.