Elon Musk’s artificial intelligence company xAI is moving into gaming, with plans to launch its first AI-generated video game by the end of next year.

According to reports, xAI has recently hired AI researchers from Nvidia to work on advanced “world models” – a new class of AI that can understand and simulate physical environments.

These systems could enable Grok to generate dynamic, photorealistic game worlds that adapt in real time based on player behaviour.

Founded in 2023, xAI is best known for its chatbot Grok, which competes with OpenAI’s ChatGPT.

Now, Musk is using the company’s massive computing infrastructure, including its Colossus data centres, some of the largest in the world, to train AI models capable of building and running entire 3D game environments.

The move comes as Musk continues to push back against what he calls a “woke agenda” in mainstream media, pledging to build alternative, AI-driven creative platforms.

Musk’s team has been experimenting with using Grok to create playable environments, similar to how AI tools like ChatGPT have been used to make simple games such as Pong and flight simulators.

The long-term vision is for AI to generate entire game worlds, characters and stories on the fly, potentially reshaping how games are designed and played.

While xAI’s project is still under wraps, insiders say the move could disrupt traditional game development.

But not everyone is convinced. Larian Studios’ Michael Douse, publisher of Baldur’s Gate 3, said on X this week that “AI won’t solve the industry’s biggest problem – leadership and vision.”