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Elon Musk spent months slashing federal contracts — Now his AI company is celebrating a $200M Pentagon contract and new unit to get government business

Published

2 months ago

July 14, 2025

Elon Musk’s xAI has signed an important new customer: the U.S. government.

The two-year old AI company—most recently in the news when its chatbot praised Hitler—said in a blog post Monday that it has launched a new division, called “Grok with Government” and signed a contract worth up to $200 million with the Department of Defense. xAI also announced that it had been added to the General Services Administration schedule, meaning that xAI products will now be available for purchase across every government office and agency.

xAI’s new DoD contract is part of a new effort to develop AI agent workflows across a “variety of mission areas,” the Chief Digital and Artificial Intelligence Office said in a press release, without giving many more specifics. Google, OpenAI, and Anthropic were also awarded up to $200 million contracts as part of the new effort, according to the Chief Digital and Artificial Intelligence Office. A number of tech companies, including Meta, Amazon, and Google, have either started working with or upped their work with the U.S. government in the last year as the taboo in Silicon Valley of working with the Defense Department has fallen away.

xAI’s new ties with the Pentagon are likely to raise eyebrows, not least because just one week earlier, the company released an update to its Grok AI model that caused it to spew racist comments, including referring to itself as a “MechaHitler.” There’s also the fact that xAI’s CEO, Musk, has spent the last six months trying to trim “wasteful spending” in the government via the Department of Government Efficiency (DOGE). DOGE claims to have saved $190 billion in U.S. taxpayer dollars by July—in large part via cutting government contracts it said were outdated or wasteful (DOGE reportedly hasn’t provided documentation or evidence for 40% of those cuts, and investigations and analysis into the cuts have suggested that these figures have been greatly exaggerated.) Now, xAI is vying to get the U.S. government to add many more contracts that could cost hundreds of millions of dollars.

Another twist is that the Grok announcement comes at a time when existing government contracts at Musk’s various companies appear to be on thin ice. In June, amid the very-public social media spat between Musk and Trump that began with Musk’s criticisms of Trump’s “Big Beautiful Bill,” Trump threatened to cut all of Musk’s government contracts across his various companies. Musk, in turn, had suggested he would decommission SpaceX’s Dragon capsule, currently the primary way for NASA to shuttle astronauts to the International Space Station and back to Earth. Musk’s companies have notched more than $38 billion in contracts with the U.S. government over the years.

xAI says that it wants to start servicing federal, local, state, and national security customers, and that, for these customers, it would start to build custom models for national security or “critical science” applications that would be available in “classified and other restricted environments” and that it would provide specific engineering support with USG-cleared engineers.

While Musk is no longer working with DOGE, he remains well-connected in some government circles. One of his allies within the Trump Administration was Katie Miller, who had served as Mike Pence’s press secretary when he was vice president during Trump’s first presidency. Miller is also the wife of Stephen Miller, Trump’s deputy chief of staff for policy, and she has since started working for xAI since Musk left DOGE. On Monday, Miller was promoting xAI’s new government plans on her social media account, saying that Grok was the “only truth-seeking AI available to the US Government.”

xAI and the Department of Defense did not respond to requests for comment. GSA said it was working with “several” AI solutions across various agencies and that it welcomes “all American companies and models who abide by our terms and conditions.”

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Related Topics:Artificial intelligence Department of Defense Elon Musk SpaceX Startups

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AI company Anthropic to pay authors $1.5 billion in landmark settlement

Published

4 hours ago

September 6, 2025

The Editors

Big numbers often get thrown around in the aftermath of legal battles, as judges hand down judgements—or attorneys arrange settlement amounts—in the tens, or hundreds, of millions of dollars. Still, even jaded legal observers can occasionally run into a genuinely daunting number while parsing this stuff. Like, say, the $1.5 billion settlement that AI company Anthropic has agreed to pay in the ongoing class-action suit against it, launched by authors who said the company infringed on their copyrighted works by feeding them as training data to its “AI assistant” Claude. Sure, parts of that sum (calculated at $3,000 per work for a staggering number of works, and with its first $300 million installment due just five days after the settlement is approved) might potentially vanish in a puff of future bankruptcy. But it’s still the “largest publicly reported copyright recovery in history,” according to legal documents from the authors’ attorneys.

That being said, the win here on the wider AI front is quite a bit less clear than “hand our clients the annual estimated GDP of Grenada” might suggest. Yes, U.S. District Judge William Alsup set the stage for Anthropic to eat that massive price tag by ruling that the company clearly violated copyright agreements via how it acquired the books it fed into its own personal woodchipper. (I.e., downloading pirated datasets of millions of books that had been floating around the internet.) And, yes, the settlement will require Anthropic to destroy those “shadow library” datasets in its possession. (But notably, with no actual changes to the Claude large language model itself.) Most critically, though, back in June, Alsup also ruled that “reproducing purchased-and-scanned books to train AI” falls under fair use, calling the case “exceedingly transformative” as a justification for the designation.

As such, both sides in the fight issued statements claiming a form of victory today, with the authors’ side focusing mostly on the massive size of the settlement amount. Anthropic, meanwhile—which has been backed in the past with more than $6 billion in contributions from Amazon and Google—focused its statements on the legal precedent it achieved in the case: “In June, the District Court issued a landmark ruling on AI development and copyright law, finding that Anthropic’s approach to training AI models constitutes fair use. Today’s settlement, if approved, will resolve the plaintiffs’ remaining legacy claims.” What this likely means is that AI companies aren’t going to slow down—especially with, say, a $1.5 billion mortgage suddenly hanging over their heads—but simply become a lot more choosy about how they get their training data.

[via Deadline]

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Business

Broadcom Inc. Reports Record Revenue Amid AI Growth

Published

4 hours ago

September 6, 2025

TipRanks Auto-Generated Newsdesk

Broadcom Inc. ((AVGO)) has held its Q3 earnings call. Read on for the main highlights of the call.

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The recent earnings call from Broadcom Inc. showcased a strong performance in AI semiconductors and infrastructure software, with record revenues and a solid backlog. Despite some challenges in the non-AI semiconductor segment and pressures on gross margins due to product mix, the overall sentiment was optimistic. The positive highlights significantly outweighed the lowlights, indicating a promising outlook for future growth, particularly in AI.

Record-Breaking Revenue and Growth

Broadcom Inc. reported a record total revenue of $16 billion, marking a 22% increase year-on-year. This impressive growth was primarily driven by the strong performance in AI semiconductors and the expansion of VMware. The company’s ability to achieve such significant revenue growth underscores its strategic focus on high-growth areas.

AI Semiconductor Growth

The AI semiconductor segment was a standout performer, generating $5.2 billion in revenue, which represents a 63% increase year-on-year. This marks the 10th consecutive quarter of robust growth in this segment. Looking ahead, Broadcom forecasts AI semiconductor revenue to reach approximately $6.2 billion in Q4, up 66% year-on-year, highlighting the company’s leadership in this rapidly expanding market.

Infrastructure Software Segment Performance

Broadcom’s infrastructure software segment also delivered strong results, with revenue reaching $6.8 billion, up 17% year-on-year. The total contract value booked during Q3 was $8.4 billion, reflecting the company’s strength in securing long-term commitments from customers.

Strong Backlog and Bookings

The company’s consolidated backlog reached a record $110 billion, with bookings showing robust growth, particularly in AI. This substantial backlog provides a solid foundation for future revenue and demonstrates strong customer demand across Broadcom’s product lines.

CEO Tenure Extension

In a significant leadership development, Broadcom’s board and CEO Hock Tan have agreed that he will continue as the CEO through at least 2030. This extension provides stability and continuity in leadership, which is crucial for executing the company’s long-term strategic vision.

Non-AI Semiconductor Demand

While the AI segment thrived, the non-AI semiconductor demand remained sluggish, with Q3 revenue of $4 billion flat sequentially. Enterprise networking and service storage experienced sequential declines, with only broadband showing strong growth. This highlights the challenges Broadcom faces in certain segments of its semiconductor business.

Gross Margin Impact

Broadcom anticipates a slight decline in its Q4 consolidated gross margin, down approximately 70 basis points sequentially. This is primarily due to a higher mix of XPUs and wireless revenue, which impacts the overall product mix and margin structure.

Forward-Looking Guidance

During the earnings call, Broadcom provided robust guidance for the upcoming quarter and fiscal year. The company forecasts Q4 2025 consolidated revenue of $17.4 billion, up 24% year-on-year, with AI semiconductor revenue expected to reach $6.2 billion, up 66% year-on-year. Infrastructure software revenue is projected at $6.7 billion, up 15% year-on-year. Broadcom anticipates an adjusted EBITDA margin of 67% for Q4, with continued growth in the AI business and the addition of a significant fourth customer expected to positively impact fiscal 2026.

In summary, Broadcom Inc.’s latest earnings call highlighted a strong performance in AI semiconductors and infrastructure software, with record revenues and a promising outlook for future growth. Despite some challenges in non-AI segments and margin pressures, the overall sentiment was optimistic, driven by significant achievements and robust forward-looking guidance.

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Runway founder Cristóbal Valenzuela wants Hollywood to embrace AI

Published

6 hours ago

September 5, 2025

The Editors

At 84, veteran mogul John Malone is still a power broker, hinting at “further consolidation in the media industry” following a recent sit down with David Ellison. Should we be on the lookout for a Warner–Paramount merger? Meanwhile in Vegas, the Sphere’s $100 million Wizard of Oz reimagining leans on AI to expand the visuals and even slip in cameos of David Zaslav and James Dolan. The Directors Guild did not take kindly to the stunt. Partners in Banter Kim Masters and Matt Belloni pull back the curtain on the Sphere’s Emerald City sideshow.

Plus, Masters speaks with Runway co-founder Cristóbal Valenzuela about the role of artificial intelligence in Hollywood. The Chilean-born developer acknowledges that AI may lead to some job losses, but he argues it will ultimately benefit filmmakers. He explains why studios including Lionsgate, Netflix, and Disney are already using Runway’s tools. Plus, he compares the current backlash against AI to the upheaval that followed the introduction of sound in film.

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