The Trump administration has struck a significant deal with Elon Musk’s AI company xAI, granting U.S. federal agencies access to its Grok 4 and Grok 4 Fast models for a nominal fee. The agreement, facilitated through the General Services Administration (GSA), sets the model price at $0.42 per agency over an 18-month term, running through March 2027.
Under the terms, xAI engineers will help implement the models across agency systems, and federal users can upgrade to enterprise tiers aligned with security standards such as FedRAMP and DoD Impact Levels.
What this Means
- Competition in federal AI access heats up: xAI joins OpenAI, Anthropic, and Google in supplying advanced AI services under the GSA’s OneGov procurement strategy. With low pricing, xAI is aiming for wide usage across government workloads.
- Symbolic thaw in Musk-White House ties: The deal signals renewed cooperation between Musk and the Trump administration after some earlier friction.
- Risks and scrutiny remain: Grok has faced criticism around accuracy, bias, and safety, meaning regulators will be watching closely.
- Strategic benefits for xAI: Federal approval gives xAI credibility, access to large-scale workloads, and a long-term growth channel even with low near-term revenue.
Musk just scored what looks like a stamp of approval from Washington. For xAI, the government isn’t just a customer — it’s a powerful reference point in the global AI race. If Grok proves effective in federal use, that could put xAI on equal footing with OpenAI, Google, and Anthropic.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
Related:
Nvidia Stakes $5 Billion in Intel: A Strategic Revival for the Chipmaker
Trump Turns Washington Into America’s Biggest Activist Investor With Intel Deal
Trump’s 10% Stake in Intel: A “Great Deal” or Political Gamble?
Intel Secures $2 Billion Lifeline From SoftBank, Shares Jump
Markets Slide as Strong Data Lifts Yields, AI Stocks Sink
