SpaceX announced on Tuesday that it has secured the right to acquire AI coding startup Cursor for $60 billion later this year, or to pay $10 billion for ongoing work if the acquisition does not proceed, marking one of the largest single bets in the history of artificial intelligence.
The deal, disclosed via a post on X by SpaceX, positions the company to directly challenge OpenAI’s Codex and Anthropic’s Claude Code by integrating Cursor’s AI-powered code editor into its own AI assistant, Grok, which was developed under Musk’s xAI venture. SpaceX emphasized that combining Cursor’s software with its Colossus supercomputer — a system powered by 200,000 Nvidia H100 GPUs — would enable the creation of “the world’s most useful models” for coding and knowledge work.
Cursor, founded in 2022 by four MIT graduates — Michael Truell, Sualeh Asif, Arvid Lunnemark and Aman Sanger — began as a reaction to what its founders saw as stagnation in AI-assisted coding tools. Asif told a 2024 Lex Friedman podcast that the team felt frustrated seeing AI models improve although Copilot’s experience remained unchanged, prompting them to build an editor where AI is embedded directly into the workflow rather than bolted on as a sidebar chat.
The startup has grown rapidly, raising a $60 million Series A in 2024 at a $400 million valuation backed by Andreessen Horowitz, Thrive Capital, and early supporters from Stripe and OpenAI. Its November 2025 Series D round, led by Accel, Thrive, and A16z with participation from Coatue, Nvidia, and Google, valued Cursor at $29.3 billion — a figure that has since more than doubled in private talks, with Cursor reportedly seeking $2 billion at a valuation exceeding $50 billion.
SpaceX’s move comes amid escalating tensions in the AI sector, less than a week before Musk is set to face Sam Altman in court over Musk v. Altman, a high-profile lawsuit concerning OpenAI’s transition to a for-profit model. Notably, OpenAI’s Startups Fund led Cursor’s $8 million seed round in 2023, making Altman’s company an early backer of the startup now being acquired by Musk’s space and AI empire.
Following a wave of departures from xAI’s founding team, SpaceX recently hired two Cursor engineers, Andrew Milich and Jason Ginsberg, signaling a deeper integration of talent between the two organizations. Cursor’s CEO, Michael Truell, described the partnership as “a meaningful step on our path to build the best place to code with AI,” emphasizing the goal of scaling Cursor’s Composer model with SpaceX’s computational scale.
For Cursor, the deal provides access to computing resources that few startups can rival — Colossus represents one of the largest AI training clusters in the world, potentially giving the company an edge in training larger, more sophisticated models than would be feasible independently. The arrangement too allows SpaceX to avoid the regulatory and financial risks of an outright purchase while maintaining strategic control through an option to acquire.
The valuation implied by the deal — $60 billion for a company last valued at $29.3 billion — reflects not just Cursor’s current technology but Musk’s belief in its potential to become a foundational layer of AI-augmented software development, especially as enterprises seek tools that proceed beyond autocomplete to enable true collaborative coding with AI.
Why is SpaceX choosing an option to acquire rather than an outright purchase?
SpaceX structured the deal as an option to buy Cursor for $60 billion later this year or pay $10 billion for work done together, allowing it to secure strategic access to Cursor’s technology and talent while deferring the full financial commitment and potential regulatory scrutiny of an outright acquisition.
How does Cursor’s valuation jump from $29.3 billion to over $50 billion in talks?
Cursor is reportedly in discussions to raise $2 billion at a valuation above $50 billion, driven by investor confidence in its growth trajectory and the strategic value of its technology — a round that would precede and potentially inform SpaceX’s acquisition option, though the $60 billion figure reflects SpaceX’s internal valuation of the company’s long-term potential under its ownership.