Microsoft looked at buying Cursor before SpaceX deal, sources say
Microsoft CEO Satya Nadella speaks at the Microsoft AI Tour event on February 25, 2026 in Munich, Germany.
Sven Hoppe | Picture Alliance | Getty Images
Before SpaceX announced this week that it had acquired the rights to buy Cursor for $60 billion. Microsoft He looked at a potential deal for the AI coding startup, according to two people familiar with the matter.
Microsoft, which is trying to increase the popularity of AI tools to keep up with the growing market for AI tools, has chosen not to proceed with the offer, one of the sources said. Both sources asked not to be named because the talks were private.
While Microsoft is attracting developers with GitHub Copilot, the AI coding market is currently dominated by Cursor along with Anthropic and OpenAI. Microsoft’s primary role in this space has been as an investor and cloud provider, pumping billions of dollars into Anthropic and OpenAI, with Microsoft committing to spend heavily on Azure.
Microsoft declined to comment. A Cursor spokesman did not respond to a request for comment.
Venture capital firms arranged financing for Cursor at a $50 billion valuation, CNBC reported earlier this month, underscoring growing demand for tools that can help users quickly put together websites and apps.
SpaceX, controlled by Elon Musk, said in a post published on X on Tuesday that it had reached an agreement to buy Cursor for $60 billion by the end of the year, otherwise it would pay the company $10 billion.
“SpaceXAI and @cursor_ai are now working closely together to create the world’s best coding and knowledge work AI,” the company said in the post. Cursor CEO Michael Truell said in X that he was “thrilled to partner with the SpaceX team to grow Composer,” referring to his company’s AI model.
The SpaceX deal came so late in Cursor’s fundraising process that potential investors were caught off guard by the deal, one of the sources said. SpaceX had offered computing access to Cursor in the weeks before this announcement.
In February, Musk merged SpaceX with artificial intelligence startup xAI in a deal worth $1.25 trillion, and is in the process of taking the combined company public in a likely record IPO.
Microsoft, meanwhile, has seen its stock price fall 10% this year; which underperformed the overall market and its hyperscaler peers. CEO Satya Nadella told analysts in January that GitHub Copilot had 4.7 million paid subscribers, up 75% from the previous year.
OpenAI publishes its own Codex programming implementation. CEO Sam Altman said: in x On Tuesday, it was announced that Codex had reached 4 million active users, less than two weeks after passing the 3 million mark. Anthropic’s Claude Code service has gained popularity this year, helping Anthropic reach $30 billion in annual revenue this month.
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