Can Elon Musk’s X project re-align itself around AI, and replace its lost ad revenue with AI investment?
Yesterday, we reported that X is indeed now making more money from its AI offerings, and saw a significant boost in its AI revenue intake after the launch of its latest Grok 4 model. But X has always relied on ad revenue, and it’ll need a heap of AI investment to not only continue funding Elon’s broader AI ambitions, but to also fund both X and xAI moving forward.
And with some significant competitors in the broader AI race, it seems unlikely that xAI will be able to keep up with their deep pockets.
Or will it?
Today, the Wall Street Journal has reported that xAI is seeking an additional $12 billion in funding, largely via private investors, to take the project to the next level.
xAI has already raised over $17 billion in funding through six funding rounds, as Elon and Co. have sought to rapidly build out their AI capacity to take on Meta, Google and OpenAI in the race for AI supremacy.
Though OpenAI remains Musk’s key target. Spurned by OpenAI rejecting his initial push to become CEO of the project, despite taking millions in donations from him, Musk has made it his personal mission to destroy OpenAI however he can.
And aside from several legal challenges to derail his rival, xAI is his key weapon in this fight, with Musk now focused on building his AI systems into an unmatched behemoth of raw processing power, with a view to blowing competitors out of the water.
Indeed, Musk says that xAI is now operating 230k NVidia H100 GPUs at its various data centers, which are powering the latest Grok model.
For comparison, Meta currently has around 350,000 Nvidia H100 chips powering its AI projects, while OpenAI has around 200k in operation.
And on top of this, Musk says that xAI is hoping to significantly boost that processing power with its own, proprietary processes.
“The @xAI goal is 50 million in units of H100 equivalent-AI compute (but much better power-efficiency) online within 5 years.”
That would be some feat. 50 million units of processing power would be almost 150x more powerful than the current most powerful system, which could give xAI a significant advantage, though Meta is also investing “hundreds of billions” into its own “superintelligence” initiative, and OpenAI is also looking to secure additional funding.
The question then is can Elon do it? Can Elon secure enough funding to make xAI into a key AI provider, and then, will there be enough investment in AI projects to make this into a money-making enterprise moving forward?
xAI is already skirting controversy, by editing its bot responses to better align with Elon’s personal views, and launching NSFW AI companions for human/digital relationships. Both of these seem like potential risk vectors for the company, and Elon’s willingness to toe the line on this front seems like it could be an issue for at least some big-name investors.
But Elon also has a cult following, with a broad spectrum of people still viewing him as a visionary tech genius who’s going to lead us into the next plane of human existence.
His history of ensuring his investors make money also helps, and it may well be possible that Musk will be able to keep securing funding for his ambitious AI projects.
Will that ensure AI supremacy, and thus, money from expanded implementation of xAI’s models? It’s impossible to say, and with Meta also throwing cash at its AI initiatives, it will be difficult for Musk to keep up.
But this seems to be the bet. X is not going to get its ad revenue back on track, at least not at the levels that it once saw, before Musk took over, and with xAI acquiring X, it does seem like Musk is realigning his focus onto AI investment instead.
Either that’ll enable X to shift its moderation approach, without having to align with advertiser demands, or it’ll see both X and xAI fail at some stage.
It’s a heap of money, and it’s hard to see it all falling away. But maybe, xAI could be in for more challenging times ahead.
