I see several issues facing Musk's foray into AI, even without considering his prickly personality and capricious handling of Twitter.
He's well behind the frontrunners, Microsoft/OpenAI and Google. He's buying Nvidia GPUs and trying to recruit new personnel to staff up, while they're already making their own custom AI-accelerators and have established staffing and AI models. Both are going full steam ahead, locked in competition with each other. It's to see how a copycat will catch up, let alone surpass them.
Given his mistreatment of Twitter's employees and his strident right-wing ideology that alienates many people, it will be difficult attracting top-end talent. Sure, money talks, and reportedly he recruited some dude from DeepMind, but he'll need a lot more than just a handful of AI specialists. Tech workers by and large have a liberal bent, and AI techs are in high demand now. So the value proposition of jumping ship to work for a right-wing troll who has a track record of employee mistreatment, is patently unattractive. Just to wit Trump's Truth Social's recruitment issues (where Musk got his TruthGPT riff) and multiply that times 100.
His track record with AI development is poor, if Tesla's ongoing FSD debacle is any indication. The fact that he's calling his venture [XYZ]GPT means he's content to follow the frontrunners' footsteps with a GPT model, along with every other company. He'll be just one more copycat in a crowd of copycats, with minimal prospect of standing out. His explanation of making AI safer by "trying to understand the truth of the universe" is laughably ridiculous and smacks of a snake-oil pitch.
Musk's newly-formed X.AI company is yet another distraction. Already, his core company Tesla (which constitutes the core of his wealth) is suffering from lack of leadership. Its first-mover advantage is quickly eroding along with its stock price. No new products along with repeated price cuts don't portend a bright future for that company.
Let's be clear, Musk has had some outstanding achievements in service of society. SpaceX has advanced spaceflight with cheap reusable rockets, and has re-energized the US space efforts. Starlink likewise has advanced sat-Internet connectivity, and is the single most important contribution in the Ukraine-Russia war. Tesla has legitimized the notion of EVs and accelerated its adoption by the car industry.
These were all monumental accomplishments, and Musk deserves credit. But past performance does not predict future results. His latest attempt to remake Twitter was a disaster, and exposed his many failings. Musk is on a downward slope, and from all indications thus far with TruthGPT (viz to further his right-wing ideology), that slide will continue.