SpaceX just revealed it has partnered with Cursor, the wildly popular AI coding tool. It has also secured an option to buy Cursor outright, for $60 billion.
The announcement is turning heads, and for good reason. This isn’t just two tech companies shaking hands.
It’s a signal that Elon Musk’s growing empire has its sights set on dominating the AI software space, not just outer space.
Also read: Elon Musk Rebuilds xAI From the Ground Up
The Deal
The two companies are teaming up to build what they’re calling a next-generation “coding and knowledge work AI.”
SpaceX will bring its Colossus supercomputer to the table. The company claims Colossus packs the equivalent processing punch of one million Nvidia H100 chips.
That’s an enormous amount of computing firepower. Cursor brings something just as valuable: trust. Developers love Cursor.
The platform has become a go-to tool for software engineers who want AI assistance without the clunky experience of older tools.
At some point later this year, SpaceX will face a choice. Either pay Cursor $10 billion for its work on the project, or go all-in and acquire the company for $60 billion.
No exact date has been announced.
Cursor’s Valuation
Cursor’s valuation has soared faster than almost anything else in tech. Just last year in January, the company was valued at $2.5 billion.
By May, that jumped to $9 billion. Then in November, Cursor closed a $2.3 billion Series D round at a post-money valuation of $29.3 billion.
Last week, reports surfaced that Cursor was eyeing a $50 billion valuation in an upcoming private fundraising round. Now SpaceX is willing to pay $60 billion.
This deal didn’t come out of nowhere. There’s been a slow build-up of connections between Cursor and Musk’s network of companies.
Last week, reports confirmed that xAI, Musk’s AI company, would start renting computing power from its data centers to Cursor.
The coding startup planned to use tens of thousands of xAI chips to train its next AI model.
Even more telling: two of Cursor’s most senior engineering leaders, Andrew Milich and Jason Ginsberg, recently left to join xAI. Both of them now report directly to Musk.
Why SpaceX?
SpaceX is best known for launching satellites and sending astronauts to the International Space Station.
The company is expected to go public soon. An IPO of this size needs a compelling story for investors.
Adding a major AI software play, especially one in the hottest product category in tech right now, makes the company look like more than just a rocket builder.
It makes SpaceX look like a full-scale tech conglomerate. Investors love a good story. And “we’re acquiring the most popular AI coding tool in the world” is a very good story.
Awkward Situation
Right now, Cursor still uses and sells access to models from Anthropic and OpenAI. Those are two of the biggest AI companies in the world.
They’re also now building their own coding tools, which puts them in direct competition with Cursor.
So, Cursor is essentially paying its biggest rivals to power its own product. That’s an uncomfortable position to be in.
Meanwhile, xAI doesn’t yet have models that can match what Anthropic or OpenAI offer. Neither does Cursor’s current tech stack, for that matter.
The SpaceX-Cursor partnership looks, at least in part, like an attempt to eventually change that, to build something homegrown that doesn’t depend on competitors.
