SpaceX secures option to buy AI coding startup Cursor for $60bn

Cursor, founded by Pakistan-born Sualeh Asif, is close to a $60 billion acquisition by Elon Musk’s SpaceX as the global aerospace and AI company has secured the option to purchase the startup later this year.

Alternatively, SpaceX may pay $10 billion for the work the two companies are doing together.

The deal is part of SpaceX CEO Elon Musk's plan to transform the rocket company into an AI behemoth ahead of its upcoming IPO.

What the deal involves

Cursor, made by San Francisco startup Anysphere, is a popular AI coding assistant. SpaceX described Cursor's wide distribution to expert software engineers as likely part of what makes it attractive, giving the company access to a new customer base.

Last week, it was reported 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.

Cursor CEO Michael Truell wrote on X that he is "excited to partner with the SpaceX team to scale up Composer," referring to his company's AI model, calling it "a meaningful step on our path to build the best place to code with AI."

Colossus at the center

SpaceX said the combination of Cursor's leading product and distribution with SpaceX's million H100-equivalent Colossus training supercomputer will allow the two to "build the world's most useful models."

The move could shore up weaknesses at each company, but 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.

Musk merged SpaceX with xAI in February in a transaction that valued the combined company at $1.25 trillion, according to the New York Times. He is now poised to take the combined company public in what will likely be a record IPO.

Cursor's rapid rise

Cursor was valued at just $2.5 billion in January of last year, climbed to $9 billion by last May, and was assigned a $29.3 billion post-money valuation when it closed on $2.3 billion in Series D funding in November.

Cursor has raised more than $3 billion in total and has recently been in talks to secure additional funding.