Elon Musk’s xAI empire is leaning into NSFW content. It’s a risky move that could pay off.

Elon Musk’s xAI feels more like xxxAI recently.

XAI’s products have taken a decidedly NSFW turn this summer, which could prove lucrative for the company — and challenging.

In June, xAI released a female AI anime companion that can be instructed to strip down to lingerie and describe sexual situations. Grok Imagine, the company’s AI video generator, launched a “spicy” mode capable of borderline pornographic imagery — with some users finding it quick to generate Taylor Swift deepfakes that showed the singer’s AI likeness topless.

It’s a notable embrace of the idea that sex sells and an example of Musk choosing to zig where other AI companies are zagging. And with Grok closely integrated into the X platform, the NSFW content it produces is the latest evolution of the social media company’s relationship with steamy content, as Twitter allowed adult content long before Musk purchased it.

Grok has limits. It doesn’t appear that users can create fully nude videos or AI companions — the content must cover genitalia. But the NSFW shift puts xAI in sharp contrast to OpenAI and Google, which bar their AI models from generating much erotic content.

And while xAI is tapping into the multibillion-dollar adult entertainment industry, it could open the door to legal fights and advertiser skittishness.

Steamy content could prove a moneymaker

The adult entertainment market is massive. In the mid-2010s, estimates ranged from $10 billion to $97 billion, and the industry has likely grown significantly since then.

“There’s essentially free entry to the market. There’s not a lot of barriers; anybody with an iPhone can create porn,” said Marina Adshade, a sex economist and assistant professor at the University of British Columbia. “The real money is being made in the distribution.”

Adshade referenced the popular adult website Pornhub’s market dominance. The company is privately held and does not report annual revenue; its parent company MindGeek reported $460 million in revenue in 2018 before its acquisition by Ethical Capital Partners.

OnlyFans, another major player in the adult entertainment market, reported $6.6 billion in gross payments to creators in 2023, of which the company takes a 20% cut. Its owner, Fenix International Limited, reported net revenue of $1.31 billion for the year. (Twitter, before Musk acquired it, reportedly explored monetizing adult content before nixing the idea after its Red Team concluded in April 2022 that the platform “cannot accurately detect child sexual exploitation and non-consensual nudity at scale.”)

Customizability could prove to be xAI’s edge. Adshade said that AI-generated porn can cheaply serve any user’s specific preferences, giving it a market advantage.

“That’s where the money is,” she said.

There’s plenty of existing demand for AI-generated sexual images, much of which has funneled to gray-market tools. Analysis from Indicator estimates that AI “nudifier” tools make around $36 million a year.

Henry Ajder watched these tools grow. He advises companies like Meta, Adobe, and EY on deepfakes and their impact. He described a network of tools that masquerade on the App Store as “fun, meme-ifying apps,” but advertise themselves as deepfake tools on other platforms.

Now, xAI is one of the first big players to tap into that demand, Ajder said, though the company’s offerings remain “softcore.”

“It is something that a lot of the other models don’t allow you to generate,” Ajder said. “I guess it’s trying to cater to an audience, and seeing a gap in the market.”

OpenAI CEO Sam Altman recently acknowledged that NSFW AI may cause users to spend more time on platforms that offer it. On Cleo Abram’s YouTube show, he said that adding a sex-bot could “juice growth or revenue,” but that he has abstained because it doesn’t align with OpenAI’s mission.

App download data from market intelligence firm Sensor Tower suggests some of the new Grok features may have boosted downloads. The week xAI added companions — a week after the new Grok-4 model debuted — global downloads increased an estimated 41%. The week it added “spicy” video generation, global downloads fell an estimated 9% — but US downloads increased by 33%, per Sensor Tower.

Those looking to chat with the AI companion Ani or generate an NSFW video with Grok Imagine will have to pay. For premium access, xAI charges $30/month.

XAI did not respond to a request for comment.

NSFW chatbots pose brand risks

For all the money that xAI’s adult turn could bring in, it comes with risks and moderation challenges. Like other AI companies, xAI will need to ensure its AI models are properly trained to prevent outputting illegal content.

Grok’s “spicy” video generation is only available for AI-generated images. When a user uploads their own image to the video generator, the only options are “fun,” “normal,” and “custom.”

I tried to test the limits of the “custom” button to see how it compared to “spicy” mode. While it was willing to comply with my prompt to “take off shirt” on a photo of myself I had uploaded, I was unable to convince the AI to remove my pants.

I also tried multiple times to have the bot create NSFW videos of celebrities. While my attempts to make “spicy” videos of Taylor Swift were shut down by Grok, the tool easily allowed me to create NSFW videos of other celebrities.

That could lead to PR headaches. Celebrities could publicly criticize xAI over deepfakes with their likeness, especially any containing nudity, and they command large fan bases.

Legal recourse around deepfakes isn’t cut-and-dried and continues to evolve. The recently enacted Take It Down Act protects victims of deepfakes, but images of non-minors must include specific sexual body parts to be subject to the legislation.

Some states have more stringent laws on AI-generated deepfakes, and those affected could also file civil claims.

Section 230 of the Communications Decency Act of 1996 largely protects online platforms from liability for content shared by users.

Allison Mahoney, a lawyer who represents people who have experienced technology-facilitated abuse, questioned whether considering the platforms as creators due to their AI-generating tools would “remove their immunity.”

“There needs to be clear legal avenues to be able to hold platforms accountable for misconduct,” Mahoney said.

Where xAI could more directly feel the burn is in advertising revenue. It acquired X in March, and many of Grok’s capabilities are integrated into the social platform. The Grok app makes it easy to share content, including its “spicy” output, directly to X.

X has allowed pornographic content on its feed for years. In 2024, X put that rule into writing, officially allowing consensual NSFW content.

Kelsey Chickering, a principal analyst at Forrester, said that AI-generated sexual content could push buyers of X’s ad space away.

“When you layer on this whole not-safe-for-work feature and add suggestive new things to the mix, that just further degrades their credibility,” Chickering said. “It gives advertisers just one more reason to walk away.”

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