SpaceX says partnering with Cursor, option to buy AI startup for $60 billion in high-stakes pre-IPO move

SpaceX today announced an ambitious agreement with artificial intelligence startup Cursor; The deal secures the option to acquire the fast-rising coding platform for $60 billion later this year or alternatively invest $10 billion in ongoing collaborations. The announcement marks a decisive escalation in efforts by Elon Musk-led SpaceX to position itself at the forefront of AI-focused software development ahead of a potential public listing that could be among the largest in history.

Why Is SpaceX Betting Big on AI Coding Tools?

The deal is a direct response to growing pressure on Musk’s AI ambitions. Musk has publicly acknowledged that xAI (the artificial intelligence company he founded and later merged with SpaceX in February) lags behind rivals in coding capabilities. Following this admission, he ordered a series of layoffs at xAI. It launched an aggressive recruiting campaign, snapping up engineering talent from across the industry, including two programmers from Cursor itself: Andrew Milich and Jason Ginsberg.

The Cursor partnership now gives SpaceX access to one of the most commercially successful AI coding products on the market. Cursor’s AI assistant, first released in 2023, helps software developers write, test and debug code at scale. It has become a central tool in what the tech industry calls the era of “dither coding”; it’s short for AI-powered development workflows, which are rapidly changing the way software is built.

Oskar Schulz, president of Cursor, underlined the attractiveness of the arrangement for his company: “The SpaceX team has a tremendous amount of computing power, and together we think we can grow our model work, and we’re really excited about that. We really like their team.”

Cursor’s Valuation and Meteoric Rise in the Age of ‘Vibe Coding’

Prior to SpaceX’s announcement, Cursor was in advanced talks with investors to raise approximately $2 billion in new funding at a valuation exceeding $50 billion. Andreessen Horowitz would co-lead the tour; Nvidia and Thrive Capital were also expected to participate; It’s notable given that both Andreessen and Nvidia are current backers of xAI.

Founded in 2023, Cursor has emerged as one of the fastest-growing startups in the AI ​​ecosystem as demand for tools that increase developer productivity increases. The AI ​​assistant allows programmers to write, debug and refine code with unprecedented efficiency, positioning the company at the center of what industry insiders describe as the “share coding” movement.

What Does the SpaceX-Cursor Agreement Actually Include?

SpaceX could either complete the acquisition of the entire Cursor at a $60 billion valuation or funnel $10 billion into a joint research and product effort. The company framed the arrangement clearly: “SpaceXAI and @cursor_ai are now working closely together to create the world’s best coding and knowledge work AI.”

Michael Truell, Cursor’s chief executive, confirmed the partnership at X, writing that he was “thrilled to partner with the SpaceX team to grow Composer,” referring to Cursor’s proprietary AI model. “It’s a meaningful step towards creating the best place for coding with AI,” added Truell.

Rapid AI Expansion Since SpaceX Merger with xAI

Tuesday’s announcement is the latest phase of SpaceX’s transformation into an artificial intelligence conglomerate. The company merged with xAI in February in a transaction that valued Musk at $1.25 trillion; this figure was later reported by the New York Times. Before that, Musk used xAI to acquire social network X, formerly known as Twitter, in an equity deal announced in March 2025.

The Cursor settlement comes less than a week before Musk is due to appear in court in Northern California in a high-profile legal dispute with OpenAI CEO Sam Altman, whose company was among Cursor’s early investors.

IPO Targets and Market Impacts

The deal also has broader implications for SpaceX’s expected debut in the public markets. By strengthening its AI credentials, the company may seek to garner a high valuation from investors looking to move into the next phase of AI growth.

If realized, the acquisition would be among the largest in the history of the AI ​​industry, signaling that competition is shifting from increased innovation to large-scale consolidation.

The stakes in the AI ​​race appear higher than ever as Musk prepares for a high-profile legal face-off involving OpenAI’s leadership in Northern California. The Cursor deal suggests that SpaceX intends to not only join this race but also reshape its orbit.