Grok’s federal stall is undercutting SpaceX’s IPO growth story

Downloads have fallen from 20m in January to 8.3m in April, paid conversion is a fifth of ChatGPT’s, the $0.42-per-agency GSA deal is now stalled, and SpaceX has rented out the Memphis Colossus 1 cluster to Anthropic for $1.25bn a month.

SpaceX’s S-1 filed on Tuesday rests on an AI-revenue line Grok is no longer obviously delivering.

Grok is not selling in Washington, and on Thursday it became Wall Street’s problem. Reuters reported that Elon Musk’s xAI chatbot has failed to convert its September 2025 GSA OneGov agreement into the kind of federal-agency adoption that competitors OpenAI and Anthropic are now operationalising.

Only three days after SpaceX filed an S-1 prospectus in which the company’s AI-revenue line is positioned as the growth engine underwriting what would be the largest IPO in history.

The consumer-side numbers are sharper still. Grok downloads falling to about 8.3 million in April from a January high above 20 million.

Paid conversion, on the Reuters reporting, sits at roughly 0.174% of surveyed US consumers and workers in Q2 2026, against more than 6% who pay for ChatGPT.

The growth curve that powered Grok’s 2025 IPO-narrative contribution has reversed across the past four months.

The GSA OneGov agreement Musk signed in September is the part Washington-watchers have been tracking most closely. The $0.42-per-organisation 18-month deal, announced by the GSA in late September 2025, was designed to deliver Grok 4 and Grok 4 Fast to every federal agency at a token price.

Public Citizen has petitioned the OMB twice to suspend federal use of Grok over accuracy and bias concerns, citing prior outputs the group describes as racist, antisemitic and factually incorrect.

Senator Elizabeth Warren has separately pressed Defense Secretary Pete Hegseth over the Department of Defense granting Grok classified-system access despite NSA and GSA concerns.

The compute-side trade is the bit that gives the story its commercial sharpness. SpaceX has rented out the Memphis Colossus 1 data centre, the 220,000-Nvidia-GPU, 300-megawatt facility that was Grok’s primary training environment, to Anthropic for $1.25bn per month through May 2029.

The implication is mechanically straightforward: with Grok’s consumer demand falling, xAI has more compute than it needs, and selling that capacity to Anthropic, the lab whose Mythos model has been displacing Grok on the federal-agency procurement list, is the cleanest way to monetise the shortfall before the SpaceX IPO prices.

The financial picture inside the SpaceX S-1 makes the trade necessary. xAI losing $6.4bn from operations on $3.2bn of revenue in 2025, with revenue growth of about 22% well below the published rates at OpenAI, Anthropic and Google DeepMind.

The structural complication is that the Anthropic deal is xAI selling its own competitor the compute Grok was originally trained on.

Musk’s AI portfolio is ‘falling apart’ in part because the compute-monetisation trade signals to public-market buyers that the underlying product cannot generate enough demand to absorb the capacity Musk built for it.

SpaceX’s roadshow, which begins inside the next two weeks, will be the first formal test of whether institutional buyers are willing to underwrite the AI-revenue-line projection against the federal-stall and consumer-decline data Reuters has now laid out.

Musk’s broader portfolio fortnight has compounded the timing. xAI’s $420 tax-return commitment to employees has slipped past the promised payment window, and the Delaware court’s procedural rulings against him in the OpenAI litigation have continued to compound.

SpaceX itself has not, on the available reporting, addressed the Reuters article publicly. The prospectus does not break out Grok-specific revenue from the broader xAI line, leaving institutional buyers to interpret the federal-adoption stall against the headline AI-line growth figure.

The next visible proof point will be the S-1 amendment expected ahead of the roadshow launch, where any updated Grok-adoption disclosure would be the first formal signal of whether xAI is willing to put numbers behind the consumer and federal demand picture Reuters has now made the public story.