HomeSpaceX partners with Cursor, secures $60 billion acquisition option
SpaceX announced it has reached an agreement with Cursor to build a next-generation "coding and knowledge work AI," which includes a notable clause: an option to purchase the popular software development platform for $60 billion later this year.
Partnering with—and potentially acquiring—a leader in the hottest AI product category must be viewed in light of SpaceX's highly anticipated public offering. Investors seeking greater value in the IPO may see the Cursor engagement as another way to extract value from Elon Musk’s increasingly sprawling tech empire.
The deal won't surprise those familiar with the industry. Last week, reports emerged that xAI would begin renting computing power from its data centers to Cursor, with the coding startup using tens of thousands of xAI chips to train its latest AI model. And last month, two of Cursor’s most senior engineering leaders, Andrew Milich and Jason Ginsberg, left to join xAI, where both report directly to Musk.
SpaceX described the partnership as a project combining Cursor’s "product and distribution to expert software engineers" with SpaceX’s Colossus supercomputer, which the company claims has the equivalent compute power of a million Nvidia H100 chips.
SpaceX also stated that at some undisclosed point later this year, it will either pay Cursor $10 billion for its work or acquire the company for $60 billion. Last week, TechCrunch reported that Cursor was eyeing a $50 billion valuation in an upcoming private fundraising round. That figure itself reflects a remarkable series of leaps: Cursor was valued at just $2.5 billion in January of last year, climbed to $9 billion by last May, and reached a $29.3 billion post-money valuation when it closed $2.3 billion in Series D funding in November.
Either figure would represent a significant expense for SpaceX, which is widely believed to be losing money after acquiring xAI and the social media network X, and is planning extensive capital investment. The brief statement did not indicate whether either deal could be settled in SpaceX stock.
In the meantime, the move could address weaknesses at each company, but it also reveals them. Neither Cursor nor xAI has proprietary models that can match the leading offerings from Anthropic and OpenAI—the same companies now competing directly with Cursor for the developer market.
Cursor still uses and sells access to Claude and GPT models even as both firms roll out their own coding tools, an awkward arrangement that this new SpaceX partnership may be designed to eventually escape.
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SpaceX announced it has reached an agreement with Cursor to build a next-generation "coding and knowledge work AI," which includes a notable clause: an option to purchase the popular software development platform for $60 billion later this year.
Partnering with—and potentially acquiring—a leader in the hottest AI product category must be viewed in light of SpaceX's highly anticipated public offering. Investors seeking greater value in the IPO may see the Cursor engagement as another way to extract value from Elon Musk’s increasingly sprawling tech empire.
The deal won't surprise those familiar with the industry. Last week, reports emerged that xAI would begin renting computing power from its data centers to Cursor, with the coding startup using tens of thousands of xAI chips to train its latest AI model. And last month, two of Cursor’s most senior engineering leaders, Andrew Milich and Jason Ginsberg, left to join xAI, where both report directly to Musk.
SpaceX described the partnership as a project combining Cursor’s "product and distribution to expert software engineers" with SpaceX’s Colossus supercomputer, which the company claims has the equivalent compute power of a million Nvidia H100 chips.
SpaceX also stated that at some undisclosed point later this year, it will either pay Cursor $10 billion for its work or acquire the company for $60 billion. Last week, TechCrunch reported that Cursor was eyeing a $50 billion valuation in an upcoming private fundraising round. That figure itself reflects a remarkable series of leaps: Cursor was valued at just $2.5 billion in January of last year, climbed to $9 billion by last May, and reached a $29.3 billion post-money valuation when it closed $2.3 billion in Series D funding in November.
Either figure would represent a significant expense for SpaceX, which is widely believed to be losing money after acquiring xAI and the social media network X, and is planning extensive capital investment. The brief statement did not indicate whether either deal could be settled in SpaceX stock.
In the meantime, the move could address weaknesses at each company, but it also reveals them. Neither Cursor nor xAI has proprietary models that can match the leading offerings from Anthropic and OpenAI—the same companies now competing directly with Cursor for the developer market.
Cursor still uses and sells access to Claude and GPT models even as both firms roll out their own coding tools, an awkward arrangement that this new SpaceX partnership may be designed to eventually escape.
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