SpaceX announced Tuesday it has secured the right to acquire AI coding startup Cursor for $60 billion later this year, or pay $10 billion for ongoing work if no acquisition occurs.
The deal, disclosed via posts on X by both companies, gives Cursor access to SpaceX’s Colossus supercomputer — a system powered by 200,000 Nvidia GPUs — while granting SpaceX a strategic foothold in the competitive AI coding tools market. Cursor, founded in 2022, reported $1 billion in annual recurring revenue last November and has over 300 employees.
Cursor’s technology helps developers test code changes and record actions through video, logs and screenshots. The startup recently released its first agentic coding model, aiming to handle more complex software tasks beyond basic code completion. It has long cited compute constraints as a bottleneck to scaling its training efforts.
SpaceX’s Colossus, described internally as equivalent to a million H100 GPUs, provides the raw processing power Cursor needs to advance its models. In return, SpaceX gains access to Cursor’s growing user base of software engineers and its evolving AI agent capabilities.
The partnership aligns with SpaceX’s broader AI ambitions following its February merger with xAI, Elon Musk’s artificial intelligence startup, in a transaction valued at $1.25 trillion. Musk intends to take the combined entity public later this year in what could be a record-breaking IPO.
Cursor had been in talks to raise $2 billion at a valuation above $50 billion, with Andreessen Horowitz, Nvidia, and Thrive Capital expected to participate — firms that also backed xAI. The company had previously raised a Series D round at a $29.3 billion post-money valuation.
For xAI, the Cursor deal represents an effort to close ground on rivals like OpenAI, which offers Codex, and Anthropic’s Claude. Musk has acknowledged that xAI’s chatbot, Grok, currently lags in coding performance.
Cursor CEO Michael Truell said in an X post that he is “excited to partner with the SpaceX team to scale up Composer,” the company’s AI model, calling it “a meaningful step on our path to build the best place to code with AI.”
SpaceX recently hired two former Cursor product engineering leads, Andrew Milich and Jason Ginsburg, to oversee its AI product team. They report directly to Musk and xAI president Michael Nicolls.
The announcement comes less than a week before the start of Musk v. Altman, a high-profile legal case between Musk and OpenAI CEO Sam Altman, whose company was an early investor in Cursor.
Neither SpaceX nor Cursor responded to requests for comment on the deal.
Why is SpaceX paying $10 billion for work if it doesn’t buy Cursor?
The $10 billion fee covers access to Cursor’s engineering work, model training, and product development under the partnership, ensuring SpaceX compensates Cursor for shared R&D even if the acquisition does not proceed.
How does Cursor’s valuation compare to its recent funding talks?
Cursor was seeking $2 billion at a valuation over $50 billion, but the SpaceX deal values the company at $60 billion for a potential acquisition — reflecting a premium tied to SpaceX’s computing resources and strategic integration.
