TheChek News Flow

The Takeaway

Elon Musk’s xAI wants companies around the world to buy its Grok AI models as it tries to build a moneymaking business. To get there, xAI has created an enterprise AI sales group over the past half-year that has expanded to more than a dozen people.

But xAI’s lack of experience in selling to big businesses is holding many potential customers back. While xAI has signed up some big clients—including Morgan Stanley and Palantir—they’re generally conducting small tests of its technology, each bringing in hundreds of thousands or single-digit millions in revenue, according to two people who have worked for xAI.

And many of the companies that are the most interested in buying Grok already had existing business relationships with Musk or his other companies, one of the people said.

Morgan Stanley, for instance, was Elon Musk’s main adviser on his purchase of Twitter—now called X—in 2022 and also helped arrange the financing for that deal. Palantir’s controlling shareholders include Peter Thiel, who worked with Musk at PayPal.

Adam Mansfield, a practice leader at UpperEdge who helps large companies negotiate deals with cloud firms and software providers, said he does not have clients who use or are seriously considering using Grok for business. Executives at companies deciding what kind of AI tools to buy “are not ready to put their neck on the line” by choosing a vendor that doesn’t have a record of working with enterprises, Mansfield said. Instead, many companies want to see how spending on AI services from trusted existing software suppliers like Microsoft pays off before buying products from other vendors, he said.

Palantir chief architect Akshay Krishnaswamy said in an email that the company offers clients models from xAI alongside others from the likes of OpenAI, Anthropic and Google through a service called the Palantir AI Platform. Palantir also uses Grok and other models through the AI Platform internally for managing its own logistics, recruiting and other tasks, Krishnaswamy said. In addition, Krishnaswamy pointed to an announcement from May in which Palantir said it was partnering with xAI and investment firm TWG Global to build AI for financial services.

Morgan Stanley didn’t respond to requests for comment. In an automated response to an email seeking comment, xAI said: “Legacy Media Lies.”

XAI has raised a total of $27 billion in debt and equity, according to PitchBook, to finance the buildout of data centers needed for AI computing. Its major AI startup rivals—OpenAI and Anthropic—have made significant strides in selling their products, and each generates billions in revenue. Musk’s SpaceX has invested $2 billion in xAI, while Tesla has indicated it’s considering investing as well.

Details of xAI’s finances couldn’t be learned. The company’s only existing business is X, whose main revenue is advertising. Despite relentless cost cutting, X has consistently struggled to turn a profit. Bloomberg reported on Friday that X’s revenue rose 17% to $752 million in the third quarter, but the company was still losing money.

Aside from X, xAI’s biggest source of revenue is selling Grok subscriptions to consumers, according to two people who have worked at xAI. And while Grok has its own app, xAI has also integrated some of Grok’s features into the X app and upsells X users on Grok subscriptions.

Grok has a free tier, but a $30 a month “SuperGrok subscription” offers unlimited access to virtual “companions,” digital characters designed to serve as romantic partners and friends. Musk unveiled the companions at an xAI all-hands meeting in July, according to two people who were there.

When xAI launched companions that month, one was Ani, a 22-year-old female with blond hair. Grok users were allowed to engage in sexually explicit conversations with the character and change her into various skimpy outfits. Throughout the day, Ani would send users flirty notifications encouraging them to open the Grok app and talk to her again. And xAI would go on to add a “streaks” feature that let users unlock new outfits for Ani if they talked to her every day.

The SuperGrok subscription also includes unlimited access to Grok’s AI image- and video-generation tool, which has become a popular way to create pornography because it has less strict content moderation than rival products.

XAI isn’t alone among the top AI labs in pursuing this market. In October, OpenAI CEO Sam Altman said the company plans to start allowing ChatGPT “erotica” for verified adults in December. OpenAI executive Fidji Simo said in a media briefing on Thursday that the company now plans to launch an “adult mode” in the first quarter of 2026, according to The Verge.

Azure’s Help

XAI is continuing to try to build up the enterprise business. In September, xAI added Grok to Azure AI Foundry, a Microsoft cloud service that lets developers choose between a variety of AI models including those from OpenAI, Anthropic and DeepSeek.

XAI has also started selling Grok $30-per-month business subscriptions on Amazon Web Services’ Marketplace. But xAI has not made Grok models available on Bedrock, AWS’ primary AI service for developers, which offers models from a wide variety of companies including OpenAI and Anthropic, similar to Azure’s Foundry. However, there are signs that xAI could start working more closely with AWS—this month, xAI hired a salesperson from AWS, who wrote on LinkedIn that he would focus on selling xAI products to AWS customers.

XAI, like other top AI labs, also sees the U.S. government as a big customer. Over the summer, xAI was one of several AI labs that signed deals worth up to $200 million each with the Department of Defense. However, a generative AI site the Pentagon made available in December to military service members only included Google’s Gemini at launch.

Meanwhile, Musk’s other companies are potential sources of business for xAI, although they’re not guaranteed to become huge customers.

Tesla, for instance, offers the Grok chatbot in its vehicles and is integrating Grok into its Optimus robot. But Tesla internally encourages employees to use a variety of AI models, according to a former xAI employee and a former Tesla employee.

Some Tesla software engineers have experimented with Grok for coding, but many others prefer Anthropic’s Claude, the former senior Tesla employee said. Others at Tesla have experimented internally with customized versions of open-source models like Meta’s Llama instead of Grok. (In a recent post on X, Musk said Tesla’s chip design team prefers Grok over Claude.)

SpaceX, meanwhile, has been using Grok to help it respond to Starlink customer support requests, according to a former xAI employee. And Musk in recent months has repeatedly talked about building data centers in space—an endeavor that would almost certainly involve both SpaceX and xAI.

However, there’s a hurdle to closer cooperation with SpaceX that xAI staff have discussed: As a U.S. military contractor, SpaceX is subject to national security restrictions that severely limit its ability to hire noncitizens, Musk has said.

That puts constraints on the ability of xAI’s engineering teams, which include a large number of Chinese nationals and others who aren’t U.S. citizens, to work closely with their counterparts at SpaceX on more-sophisticated projects, according to a person who was involved in discussions about the topic at xAI.