Elon Musk’s xAI is pivoting to become an AI neocloud company by renting out AI infrastructure, as adoption of its Grok chatbot stalls against rivals OpenAI and Anthropic. SpaceX’s second-quarter earnings show xAI’s expenses in the vertical exploded 105% in the second quarter. Morningstar equity analyst Nicolas Owens said the only way for xAI to make money right now is in data centers, with the company building its Colossus II center in Tennessee and Mississippi and expanding Colossus I in Memphis. SpaceX spent more on AI in the second quarter alone than in all of 2025, with AI capital expenditures more than doubling to $15.8 billion from $7.7 billion. Last year, xAI’s total capex spend was $12.7 billion. For SpaceX’s 2026 capex across segments, xAI spend accounted for $23.5 billion, or 82.7%, of the company’s $28.4 billion. Owens said it could be a decade before they turn a profit. On an adjusted EBITDA basis, xAI improved from a loss of $609 million to a gain of $1.1 billion, nearly all from renting GPU access. Clients included Anthropic, which agreed to pay $1.25 billion per month to rent GPU servers at Colossus I, and Google, which signed a contract for $920 million a month. SpaceX CFO Bret Johnsen said the company is