I would guess it's purely because Grok isn't nearly in-demand enough to produce meaningful revenue. And they want to juice the numbers for IPO

And I'm sure it's a bonus point for Musk that it goes to OpenAI's most relevant competitor

As weird as it seems I think this is Musk’s best shot at winning over Altman. He has personal vendetta.

xAI have (with some questionable ethics) managed to actually build a data centre, so they have a ton of compute but not much inference demand for their model which is second-tier.

Everyone else trying to build data centres is really struggling (turns out building physical things is not as easy as writing code, who knew).

So Anthropic have the model but they're compute starved because everyone else they've signed agreements with still mostly have piles of dirt and the GPUs are still in Nvidia's warehouse somewhere.

It's a bit of a win-win: xAI's financial numbers will be massively improved by the revenue using otherwise useless data centre capacity, Anthropic get the compute they desperately need albeit probably paying through the nose for it

Musk's goal with X.ai from the start seems to have been primarily to compete with OpenAI, and given that Grok itself isn't doing that (not even mentioned in competitive benchmark tables), and his data centers are therefore mostly sitting idle, this deal with Anthropic helps him achieve that goal by helping OpenAI's #1 competitor.

Note how the initial deal was only for the older Colossus #1 data center, and now after losing his lawsuit against OpenAI the Anthropic deal has been expanded to Colossus #2 also. Coincidence?

Elon got rid of most of the core xAI researchers recently. It looked like firings and he said something like Grok needs to be rewritten because it was fundamentally built in a bad way. My guess - Grok was not one of the top two models and had no traction beyond users on Twitter - so investing in it did not make sense. Or maybe he needs time to build a new team and rebuild Grok, and while he’s doing that, he needs revenue to make up for all the GPUs they bought.

Either way, I doubt he has any ‘real’ advantage in this game. It’s OpenAI and Anthropic, and then everyone else including the open weight models.

What advantage? Has there ever been any indication they’re leading in any segment? Sure Elon has thrown a bunch of money at hardware, but to what end?

And frankly as bad as Altman is from a: if AI is really going to disrupt humanity do I want this guy in charge? Elon is 10x worse. So why would the best and the brightest ever work for him?

I think they overestimated the demand for Grok, which is mostly useless, and now they have too much compute on hand.

When did xAI have an advantage?

xAI advantage is that it's not censored, that's why people use Grok