Two former OpenAI employees and a group of AI safety nonprofits are warning that Elon Musk’s AI lab, xAI, could become a liability for prospective investors in SpaceX, which is preparing to file what’s expected to be the largest initial public offering in Wall Street history.

In a letter directed to investors published on Tuesday, the ex-staffers highlighted what they describe as “unpriced risks” related to xAI that could complicate SpaceX’s reported plans to raise up to $75 billion as part of its IPO. The rocket company’s private valuation shot up to over $1 trillion after it acquired xAI last year. Musk claimed his rocket company could launch data centers into space for his AI lab, but the letter’s authors argue that xAI’s poor record on safety issues could complicate how investors view the combined company as it gets ready to submit its IPO prospectus filing.

One of the letter’s signatories and coauthors is a new nonprofit called Guidelight AI Standards, which was cofounded by former OpenAI safety researcher Steven Adler and former OpenAI policy adviser Page Hedley. The group, which is backed by private donors, aims to improve the safety practices of frontier AI companies. Other AI safety nonprofits also signed on, including Legal Advocates for Safe Science and Technology, Encode AI, and The Midas Project.

Hedley tells WIRED in an interview that he believes xAI has the worst safety practices “nearly across the board” compared to other frontier AI developers, including OpenAI, Google DeepMind, and Anthropic. As a result, he argues, SpaceX may face a greater risk of regulation and litigation than other AI labs.

The letter’s authors argue that SpaceX should make several disclosures to investors, including whether xAI intends to continue developing frontier AI models. SpaceX recently struck a deal to sell a significant portion of its GPU capacity to Anthropic, and the letter claims the agreement “leaves it unclear whether xAI is still a frontier-AI competitor inside a larger holding company.” If xAI continues to develop frontier AI models, the authors say, it should be required to publish a public safety and governance plan.

SpaceX and xAI did not immediately respond to WIRED’s request for comment.

The letter also outlines examples of how xAI has not kept up with industry-standard safety practices such as publishing detailed frameworks for mitigating risks around its AI models being used in cyber attacks. The authors also outline specific safety incidents at xAI that they say warrant additional scrutiny. Among the most notable include when xAI’s flagship AI chatbot, Grok, spontaneously brought up white genocide in its responses. In another case, xAI allowed Grok to generate thousands of sexualized images of women and children, which spread widely across Musk’s social media platform X. The latter case prompted at least 37 US attorneys general to send a letter demanding that Musk’s AI lab take steps to protect women and children on its platform.

Hedley says the number of safety incidents xAI has experienced and the regulatory attention they received is “far out of proportion to its market share.” As lawmakers grow increasingly alarmed by the cyber capabilities of advanced AI models like Anthropic’s Claude Mythos, new security regulations may be on the horizon. The Trump administration is reportedly already weighing an executive order that would give US intelligence agencies more oversight over AI models.

“It takes serious investment to rein in [AI safety] risks, and it seems that xAI has historically under-invested here,” says Adler. The letter cites reporting from The Washington Post that said xAI had just “two or three” people working on safety as of January. “A question investors should be wondering is if xAI stays at the frontier, how costly might it be to, in fact, manage these [risks] responsibly? If they don’t, what might be the consequences?”

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The letter acknowledges that Musk’s AI lab has made some improvements related to safety recently, such as expanding an existing agreement with the White House to allow tests of its AI models before they’re publicly deployed. However, the authors say more disclosures are needed in order for investors to be able to fully assess the AI safety risks associated with SpaceX.

“xAI’s historical record has been serious enough to warrant scrutiny; it has not, by itself, foreclosed a better future for the company,” the letter reads.

New Watchdog

Adler and Hedley say Guidelight AI Standards is aiming to create new uniform benchmarks that AI labs can reasonably follow. They also want to offer clear assessments of AI safety practices that can be easily understood by people outside the AI world, such as policymakers, investors, and journalists. The letter on xAI is their first public action in this vein.

The cofounders say their experience working at OpenAI inspired them to launch the nonprofit which they hope can help hold AI labs accountable as an independent third party.

“While I was at OpenAI, one of the updates for me was that people on the inside are also worried about this. They don’t have all the answers,” says Hedley, who left the ChatGPT maker in 2019.

Adler, who resigned from OpenAI in 2024, says that there’s significant pressure inside of commercial AI labs to handle safety issues quickly, which he says is often appropriate to get the technology out in the world. “At the same time, there are some classes of problems—if you listen to the safety staff inside of the companies—that you just can’t handle on a just-in-time basis,” he says.

A spate of recent university commencement speakers was met with boos rather than the usual cheers when their remarks turned to the topic of AI.

The students’ vocal displeasure has brought into focus many Gen Zers’ opposition to AI and anxiety around the challenging entry-level job market.

Trying to land an entry-level job right now “is like throwing darts to begin with,” Sneha Revanur, a 21-year-old senior at Stanford University and the founder and president of AI policy nonprofit Encode AI, tells CNBC Make It.

The unemployment rate among recent college graduates, ages 22 to 27, was 5.6% in March, compared to 4.2% among all workers and 3.1% among all college grads, according to data from the New York Federal Reserve Bank.
They’re facing steeper competition: ZipRecruiter’s 2026 grad report observed a 14.9% year-over-year increase in clicks per job posting across all jobs in March, and a 21.7% increase for entry-level jobs. At the same time, entry-level roles made up only 38.6% of overall job postings on ZipRecruiter, the lowest share in at least three years.

“I don’t think that kids are having a hard time accepting [AI] because we know that AI exists,” Madison Fuentes, a recent graduate of the University of Central Florida with a degree in English creative writing, told News 6 in Orlando. “I think we’re just having a hard time acknowledging that it’s taking away job opportunities from us.”

Fuentes and Revanur are part of the class of 2026, which saw the launch of ChatGPT early in their freshman year in November 2022 and were the first to have nearly their entire undergraduate education shaped by artificial intelligence during the subsequent generative AI boom.

On top of the current job search challenges her class is already experiencing, Revanur says “there definitely is this ambient anxiety that AI is going to make things dramatically worse.”

The controversial remarks drew boos at colleges across the country.

“The question is not whether AI will shape the world. It will,” former Google CEO Eric Schmidt told graduates at the University of Arizona on May 15, to vocal uproar. “The question is whether you will have shaped artificial intelligence.”

Acknowledging the audience’s reaction, Schmidt continued: “There is a fear in your generation that the future has already been written, that the machines are coming, that the jobs are evaporating, that the climate is breaking, that politics is fractured, and that you are inheriting a mess that you did not create.”

Schmidt said that fear was “rational” but that the graduates have agency to shape the future.

Gloria Caulfield, an executive for Orlando-based property developer Tavistock, was met with a similar reaction at the University of Central Florida on May 8. The school’s arts and humanities graduates booed when she equated the rise of AI to the “next industrial revolution.” Moments later, they cheered when she said, “Only a few years ago, AI was not a factor in our lives.”

Music executive Scott Borchetta told graduates of Middle Tennessee State University on May 9 that “AI is rewriting production as we sit here.”

When the jeers ensued, he doubled down, saying, “Deal with it.”

“Then do something about it,” he added as the boos continued, noting that AI was a “tool” and the students could “make it work for you.”

‘A very real concern’

The AI boos reflect sentiments that run deeper than a momentary reaction.

“There’s a lot of totally reasonable resistance to using AI,” Revanur says. Some people are “concerned about what it means for critical thinking and creativity,” she says, or “view it as this attack on humanness.”

An April Gallup survey of over 1,500 people ages 14 to 29 living in the U.S. found that negative emotions about AI among Gen Z have “intensified” over the past year. Their excitement about AI fell from 36% to 22%, while anger rose from 22% to 31% and anxiety, at 42%, roughly held steady.

Nearly half (48%) said the risks of AI outweigh the benefits in the workplace, even as major companies and their executives are lauding AI, pushing workers to develop AI skills or risk stalling their careers. Many have also reined in entry-level hiring, saying those roles are among the easiest to replace with AI.

Even daily AI users had “become less positive over the past year,” the Gallup survey found.

The boos demonstrate “a very real concern that younger workers have,” Glassdoor chief economist Daniel Zhao said at a press event in New York City on Tuesday.

“There’s this undercurrent of uncertainty that workers are feeling that is partially driven by AI,” Zhao said. “Younger workers are nervous about where the job market is, where the economy is right now, and if the economy was doing better, if they were getting jobs, I think they would probably be a little bit less worried about AI.”

Sneha Revanur,  AI Impact Award for Civil Society

Sneha Revanur will receive the ​​AI Impact Award for Civil Society for her work founding a civil society organization, Encode, that works to influence federal AI policy that unifies pro-AI, pro-human perspectives.

Candidates pushing for AI safety regulation were far from silenced following Tuesday’s primaries.

Why it matters: AI money is now a significant part of the election landscape.

New York: Pro-AI safety candidate Alex Bores lost out to fellow Democrat Micah Lasher in a heavily watched, expensive race. But this isn’t a simple tale of AI super PAC money yielding results, nor a sign that future candidates will cower from pro-AI safety stances.

What they’re saying: Bores was polling in the single digits before Leading the Future got involved in the race, Encode AI general counsel Nathan Calvin told Axios.

Rep. Blake Moore (R-Utah)’s victory over state legislator Karianne Lisonbee, meanwhile, highlighted how data centers have emerged as a crucial political issue in their own right.

The bottom line: AI money is reshaping the campaign landscape, but this week’s results suggest that challenging the industry isn’t proving politically toxic.