Revenue Boost for X Following Launch of New AI Tools

As Elon Musk faces a decline in advertising revenue and a gradual loss of users to competing social media platforms, the pressing question arises: how will X (formerly known as Twitter) sustain its financial viability and thrive in the future?

This critical inquiry has emerged since Musk took ownership of the platform, treating it as a personal social media venture. In the ensuing months, X has experienced significant losses in its core advertising revenue, largely attributable to Musk’s controversial modifications and public positions.

Indeed, prior to Musk’s acquisition, X‘s advertising revenue constituted approximately 90% of its annual intake, which totaled around $5 billion. However, this revenue has plummeted by roughly 60%. Although Musk has implemented substantial workforce reductions and cost-cutting measures, questions linger regarding how X plans to restore its profitability and reverse the trend of declining user engagement.

Furthermore, Musk’s recent estrangement from Donald Trump has further alienated a segment of Trump’s follower base, adding another layer of complexity to X‘s recovery strategy.

The crucial question remains: how will X generate revenue moving forward?

Currently, it appears that the focus is shifting towards artificial intelligence (AI), as Musk aims to consolidate his investments in X around his xAI initiative.

Musk has long been an advocate for AI development and was one of the initial investors in OpenAI when it operated as a non-profit, striving to harness the benefits of artificial intelligence for the greater good. However, he departed from the organization after attempting to assume the role of CEO. Following the launch of ChatGPT and its subsequent monetization, Musk has harbored resentment, feeling that his initial contributions were transformed into a lucrative business without any return for him.

In some respects, Musk’s establishment of the xAI project can be viewed as a reaction to his fallout with OpenAI. Yet, amidst the current wave of AI excitement, it has emerged as a pivotal component of his redefined business strategy for X.

Can X successfully pivot its revenue model to prioritize AI and lessen its dependence on traditional advertising income?

There is indeed potential here. Recent data from AppFigures indicates that the introduction of xAI’s Grok 4 model, which offers enhanced access for paying subscribers, resulted in a significant revenue boost for X applications following the launch.

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 experienced a staggering increase of 325%, rising to $419,000 from $99,000 just a day before the launch of Grok 4.

The revenue generated from xAI primarily stems from the distinct Grok app, but since xAI now also owns X, any income generated from X‘s AI initiatives is consequently shared with the platform.

Another factor that has piqued user interest is the rollout of X‘s AI companions, including a character dubbed the “anime goth girl,” which users can interact with in NSFW chats.

Data from AppFigures reveals that downloads of Grok on iOS surged by 40% the day following the launch of these AI companions, accompanied by a notable increase in revenue.

This suggests that if X can effectively capitalize on user interest in its AI offerings, it may present a viable revenue alternative to traditional ad income. However, ongoing concerns regarding the functioning of X’s AI models—particularly given that the initial Grok 4 model integrated Musk’s personal viewpoints into its responses—along with potential mental health ramifications associated with AI companions, could hinder progress.

Nevertheless, these concerns have not stymied X‘s development, which is now also focusing on creating Grok AI bots aimed at children. However, this trajectory raises alarms about potential risks, while the evident bias in the bots’ responses may also pose challenges in attracting users from certain demographics.

It’s conceivable that xAI is gaining enough traction to secure the necessary investment to sustain both xAI and X. However, maintaining this momentum will be challenging in the long term, as xAI must continue to advance its AI technology to remain competitive. Presently, it appears that innovative applications are driving interest, alongside X‘s advanced reasoning models.

The fervor surrounding Elon Musk plays a crucial role in promoting xAI‘s tools as cutting-edge and potentially revolutionary AI models, largely due to Musk’s active involvement. Many still regard Musk as a technological visionary capable of perceiving opportunities others may overlook, which may contribute to heightened interest in his AI projects.

Nonetheless, this represents a gamble, one that risks being overshadowed by more substantial, better-funded AI initiatives.

On the other hand, X‘s business outlook is showing signs of improvement this year.

According to eMarketer, X‘s global advertising revenue is anticipated to increase by 16.5% in 2025, as more brands are likely to return to the platform, either due to the outcomes of the upcoming U.S. election or through proactive measures taken by X itself.

Perhaps this, in conjunction with other factors, could position X more favorably than previously thought, with billions allocated to xAI now potentially available for reinvestment into the platform.

There’s a possibility that X‘s AI projects could sufficiently bolster its financial outlook, although the sustainability of the initial enthusiasm for its AI tools and their capacity to generate ongoing revenue for the merged entity remains to be seen.