Something mentioned in WWDC stuck out to me (think it was Craig) about current state of LLMs not living up to their high standard of quality. Because they absolutely could (and kind of are, with the foundation models stuff) build their own. Letting Claude or OpenAI handle the Xcode changes via their integration in the next Xcode makes more sense in that context.
The high standard of quality that is Xcode?
lol
As other comments have mentioned, Xcode 26 has sherlocked a lot of the functionality of Alex.
Not everything, but the majority of the features are built in.
The product is likely just not very viable after that