SpaceX announced on Tuesday that it has secured an option to acquire Cursor, the AI-powered coding assistant startup, for $60 billion later this year, or alternatively pay $10 billion for the work the companies are doing together.
The deal, disclosed in a post on X by SpaceX, positions Cursor as a strategic asset in the company’s broader push to strengthen its artificial intelligence capabilities ahead of a potential initial public offering. The agreement combines Cursor’s product and distribution network with SpaceX’s Colossus supercomputer, which the company claims delivers computing power equivalent to a million Nvidia H100 chips.
Cursor CEO Michael Truell confirmed the partnership in his own post on X, stating he was “excited to partner with the SpaceX team to scale up Composer,” referring to Cursor’s AI model designed to assist software engineers. He described the collaboration as “a meaningful step on our path to build the best place to code with AI.”
The move comes as SpaceX continues to integrate its operations with xAI, Elon Musk’s artificial intelligence startup, which was merged with the rocket company in February in a deal Musk valued at $1.25 trillion. Musk has indicated plans to take the combined entity public in what could become a record-breaking IPO.
Cursor has been in discussions to raise $2 billion at a valuation exceeding $50 billion, with Andreessen Horowitz expected to co-lead the round alongside participation from Nvidia and Thrive Capital. The startup’s valuation has risen sharply over the past year, increasing from $2.5 billion in January 2025 to $9 billion by May 2025, and reaching a $29.3 billion post-money valuation after its Series D funding round in November 2025.
The partnership involves Cursor utilizing tens of thousands of xAI chips to train its latest AI models, reflecting an existing technical collaboration between the two companies. Two of Cursor’s senior engineering leaders, Andrew Milich and Jason Ginsberg, departed the company last month to join xAI, where they now report directly to Musk.
Whereas neither Cursor nor xAI currently offers proprietary AI models that match the leading systems from Anthropic or OpenAI, the alliance with SpaceX provides access to significant computational resources that could accelerate Cursor’s development trajectory. The startup operates in a competitive market for AI-assisted coding tools, where companies like Google, Anthropic, and OpenAI are actively advancing their own agentic AI capabilities.
Reports from The Information this week noted that Sergey Brin has directed Google to form a “strike team” focused on improving its agentic AI tools to close the gap with Anthropic’s offerings. Similarly, Sam Altman reportedly declared a “code red” at OpenAI last year before shifting focus toward the ChatGPT superapp and its Codex coding assistant, following the discontinuation of Sora.
The Verge had previously highlighted the looming IPO prospects for the SpaceX/xAI/X combination, framing the Cursor deal as part of a broader strategy to enhance the technological appeal of Musk’s interconnected ventures to potential public market investors.
As of the announcement, SpaceX has not disclosed a specific timeline for when it will decide whether to exercise its $60 billion acquisition option or proceed with the $10 billion payment for services rendered. The agreement remains contingent on future developments in the partnership and the evolving valuation of Cursor in the private markets.
Investors and industry analysts will be watching closely for any updates on Cursor’s fundraising efforts, the progress of joint AI development between SpaceX and Cursor, and further signals regarding the timing and structure of SpaceX’s anticipated public offering.
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