Old feud, fresh insult.
AI pioneer Yann LeCun just told the world that Elon Musk's most ambitious AI bet isn't paying off, and he didn't bother being polite about it.
LeCun dismissed Musk's AI company, xAI, as a struggling player unlikely to keep pace with the industry's biggest names. Speaking to CNBC, LeCun said “xAI is kind of a failure, frankly,” because its founding team has departed.
The comments reignite a long-running feud between the two AI figures. LeCun, often called one of the "godfathers of AI" because of his early contributions to the field, has repeatedly clashed with Musk over AI, social media, and the future direction of technology.
Musk, meanwhile, has previously accused LeCun of being "out of touch with AI for a long time," CNBC reported.
LeCun argued that xAI's talent problem could become an even bigger obstacle in the years ahead.
"Elon is now in a position that is very, very difficult for him to kind of hire top people in AI, because he's kind of, you know, not behaved in sort of very good ways toward the ... previous team," he told CNBC.
Several of xAI's co-founders have left the company over the past year. LeCun said those departures have weakened the company's ability to compete with rivals such as OpenAI and Anthropic.
"I'm not very positive about the prospect of xAI," he said. Asked directly whether he believed the company could compete at the frontier of AI, LeCun replied, "No, I don't."
Infrastructure is not enough
LeCun also questioned whether xAI's massive investments in computing infrastructure will translate into long-term success. He pointed to the company's data centers in Memphis, Tennessee, saying Musk has little choice but to rent computing capacity to outside firms.
"xAI has huge infrastructure," LeCun said, adding that the company leases capacity because "that's the only way he [Musk] can recoup the cost."
The facilities, known as Colossus 1 and Colossus 2, have attracted customers including Google and Anthropic. CNBC reported that xAI is part of SpaceX's AI business, which posted a $2.5 billion operating loss during the quarter ended March 31.
A warning for the AI industry
LeCun reserved some of his strongest criticism for the economics of the broader AI market. According to him, many AI companies are spending heavily to build and operate advanced systems while relying on investors to absorb losses.
"The prices are going up of those AI services, but the cost of running them is going down, but not nearly fast enough," LeCun said. "And so all of those companies are losing money, and basically, the use for most people is funded by the investors. That can't go on for a very long right?"
He warned that companies may soon face difficult choices. "They're going to have to increase prices, they're going to have to cut costs, or there's going to be a big bubble explosion," LeCun said.
Betting on a different future
LeCun has long argued that today's large language models, or LLMs, are not enough to build truly capable AI systems.
Instead, he backs what he calls "world models," systems designed to understand how the world works through objects, actions, and cause-and-effect relationships. "I personally don't think we're going to have generalized reliable agentic systems until they're based on world models," LeCun told CNBC.
That view puts him at odds with many leading AI companies, including OpenAI and Anthropic, which are investing heavily in AI agents capable of carrying out increasingly complex tasks.
Also read: Elon Musk’s AI infrastructure ambitions could shape whether his companies can turn compute, robotics, and public-market momentum into long-term value.