With its advertising business still down on previous levels, and its audience slowly filtering away to other apps, how will Elon Musk’s X continue to make money, and remain a viable proposition moving forward?
That’s been the key question since Musk purchased the app as his own social media hobby horse. In the months since, X/Twitter has suffered major losses from its core ad revenue, in response to Musk’s controversial changes and personal stances.
Indeed, X’s advertising revenue, which pre-Elon made up 90% of its $5 billion annual intake, has declined by around 60%. And while Elon has also drastically cut staff, and reduced costs wherever he can, there remains a question as to how X will be able to rebuild its profitability, and get back on the right track, as its usage continues to slide.
And also, now that Musk has turned on Trump, and alienated himself from at least some portion of Trump’s audience.
So how will X make money moving forward?
The answer, at this stage, seems to be AI, with Musk moving to align all of his X investment behind his xAI push.
Elon has long held an interest in AI development, and was one of the initial investors in OpenAI, back when the company was a non-profit, seeking the best ways to maximize AI’s benefits for humanity. But Musk was ousted from the organization, after he sought to take over as its CEO. Then OpenAI released ChatGPT, and started making money from its systems, and Elon has held a grudge ever since, because it took millions in initial donations from him and has converted that into a business from which he gains no benefit.
So, in some ways, Musk launched his own xAI project out of spite. But now, amid the broader AI hype, it’s emerged as the central element of his re-imagined X business empire.
So can X realign its revenue intake around AI, in order to reduce its reliance on ad dollars?
Well, there’s certainly something there. According to new data from AppFigures, the launch of xAI’s Grok 4 model, which also includes more advanced access to paying subscribers, saw X’s apps bring in a heap more money after the release.
As reported by TechCrunch:
“Elon Musk’s xAI launched Grok 4 late on July 9, and by Friday, July 11, Grok’s gross revenue on iOS had jumped a whopping 325% to $419,000, up from $99,000 the day before the Grok 4 launch.”
xAI’s intake was largely focused on the separate Grok app, but with xAI also acquiring X the app, any income for X’s AI projects is also now shared with X the platform in some way.
Another element that also drove more interest was the launch of X’s AI companions, including its “anime goth girl” character, which users can engage in NSFW chats with.
AppFigures data shows that Grok’s iOS downloads increased by 40% the day after the launch of its AI companions, with revenue also rising.
So maybe, if X can maximize interest in its AI offerings, that will offer a viable alternative to ad revenue, though ongoing concerns about X’s AI model workings (the initial Grok 4 model incorporated Elon’s personal opinions into its answers), as well as potential mental health issues related to AI companions, could impede this somewhat.
I mean, those concerns aren’t slowing X’s development, which is now also targeting kids with its Grok AI bot offerings. But it does seem like xAI is veering into potentially dangerous territory, while the clear bias being built into the bot’s answers also looks set to impede take-up in some circles.
But maybe, xAI is becoming big enough to secure enough investment and capital to keep both xAI and X running. That’ll be difficult in the longer term, because xAI will need to continue investing in its AI development to keep up with the competition, but right now at least, it does seem like novel applications are driving interest, as well as X’s more advanced reasoning models.
In this sense, the cult of Elon plays a key role in promoting xAI’s tools as being cutting-edge, potentially groundbreaking AI models, based on Elon’s direct involvement. Many still see Musk as a tech savant, who can see things that others cannot, and that may also be helping to generate more interest in his AI projects.
But it remains a risky bet, and one that’s likely to be superseded by larger, more well-funded AI projects,
Yet, at the same time, X’s business prospects have been looking up this year.
According to Emarketer, X’s global advertising revenue is projected to rise by 16.5% to $2.26 billion in 2025, as more brands come back to the platform, either based on the results of the U.S. election or pressure from X itself.
Maybe, in combination, that could mean that X is in a stronger financial position than expected, with the billions invested into xAI also now available to be re-shared to the platform.
And it’s possible that X’s AI projects could be enough to prop up its prospects, though it remains to be seen whether that initial interest in its AI tools will hold, and keep generating new income for the combined company.
