SpaceX announces possible deal to acquire Cursor for $60 billion

SpaceX said it has signed an agreement giving it the right to acquire AI startup Cursor for $60 billion later this year, or pay $10 billion for joint work between the two companies, as part of efforts by Elon Musk's company to catch up with competitors in AI-powered coding tools.

The rocket, satellite, and AI company announced the deal in a post on X, noting that the two companies are "now working closely together to build the world's best AI for coding and knowledge work."

SpaceX recently merged with xAI, Musk's AI company that competes with Anthropic and OpenAI in developing generative AI tools for consumers and businesses.

According to Bloomberg News, the deal comes shortly after Musk acknowledged that xAI is lagging behind competitors in coding tools and pledged to rebuild the company from scratch. In March, he ordered a round of layoffs and sought to recruit engineering talent, having previously hired from Cursor.

SpaceX will not immediately acquire Cursor due to the company's upcoming IPO, according to Bloomberg sources. Any major deal would require updating disclosures and financial statements, potentially delaying the listing, which targets a valuation of up to $2 trillion.

The $10 billion value serves as a "termination fee" if the deal is not completed, according to sources. SpaceX and xAI did not immediately respond to Bloomberg News requests for comment.

Cursor had been in talks with investors to raise about $2 billion in a funding round at a valuation exceeding $50 billion, excluding the new investment, Bloomberg reported last week.

However, the company halted that round because the funding was intended to cover its computing needs, which are now handled by xAI, according to a person familiar with the matter.

The Cursor AI assistant was launched in 2023 and helps programmers write and debug code more efficiently. The company quickly became one of the fastest-growing startups ever, and a key player in what is known as the "vibe coding" era, as developer demand grows for tools that build software based on text prompts.

But AI-powered coding requires enormous computing capacity, which SpaceX has in abundance through its large data centers in Tennessee and Mississippi.

Cursor President Oscar Schultz said: "The SpaceX team has tremendous computing capabilities, and we believe that together we can significantly scale our models. We're very excited about this. We also respect their team."

Cursor's investors include companies such as Nvidia, Alphabet's Google, OpenAI, as well as Andreessen Horowitz, Thrive Capital, Accel, and DST Global.