Elon Musk admits xAI's Grok bot is losing money
Elon Musk just admitted that his AI company, xAI, is struggling to keep its Grok Bot afloat, mainly because running the bot costs more than it earns.
This came up after a paying subscriber on X, formerly Twitter, complained about hitting usage limits way too fast.
Musk floated ads to fund GPUs
Musk explained that the main issue isn't hardware shortages, but "The cost of serving Grok Bot was unsustainably high relative to revenue," and earlier this year floated inserting sponsored links and advertisements into Grok's outputs to fund "those expensive GPUs."
It's not just xAI feeling the pinch; other AI companies like OpenAI have increasingly tightened token caps and throttled complex multi-turn reasoning models behind paid walls, while Character. AI filed for Chapter 11 bankruptcy and Relay shut down entirely in August this year.