The only reason for xAI to join SpaceX is to offload Elon's Twitter debt in the upcoming IPO.
The staggering amount of money Elon Musk raised for doing AI stuff is quite a bit more than what he ever expended on the Twitter value implosion. I think we can agree that there isn't much left of that. Also, whatever debt was issued for that was issued in dollars. We've had a few years of inflation and dollar devaluation recently. I don't think whatever Twitter debt there was is much of big headache for X at this point.
X.ai is controversial mainly because of Musk. But if you can look beyond that, it does actually have a bit of non trivial IP. Grok is not bad as a LLM. It's not necessarily best in class but it's close enough to be useful. Apple needs to license their AI from Google and OpenAI. MS outsources to OpenAI. Amazon doesn't really have their own models at all. So, as trillion dollar companies go, having your own in house developed model training pipeline that actually works isn't all that common yet.
Musk for all his failings has a talent for looking beyond the current day to day navel gazing that characterizes VC short term thinking and much of the activity in silicon valley. He clearly looks at space as a bit of underused real estate.
Star Link is one of those mad plans that actually seems to make sense now that he has proven that launching thousands of satellites into space isn't that big of a deal and can actually be profitable if you get a few million people to spend billions per month on reliable data connections.
AI data centers in space are similarly ludicrous unless you have a newly developed 100+ ton to orbit reusable launch capability at your disposal. Also, the nature of doing stuff in space is that it is a very people hostile environment. So having some in house AI capability isn't the worst idea for a space company with ambition, which like it or not SpaceX clearly has. I wouldn't call X.ai a bar gain. But what's the alternative if you are semi serious about controlling an armada of space craft across the solar system?
I would argue that they have earned their own controversy independent of Musk with all the shenanigans they pulled building out their data centers, namely their illegal use of gas turbines to power the whole thing.