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

SpaceX has unveiled an ambitious agreement with artificial intelligence startup Cursor, securing the option to acquire the fast-rising coding platform for $60 billion later this year or, alternatively, to invest $10 billion in their ongoing collaboration. The announcement marks a decisive escalation in Elon Musk’s efforts to position SpaceX at the forefront of AI-driven software development ahead of a potential public listing that could rank among the largest in history.

Why SpaceX Is Betting Big on AI Coding Tools

The deal is a direct response to mounting pressure on Elon Musk's AI ambitions. Musk had publicly acknowledged that xAI — the artificial intelligence company he founded and subsequently merged with SpaceX in February — was lagging behind rivals in coding capabilities. Following that admission, he ordered a round of redundancies at xAI and initiated an aggressive hiring campaign, poaching 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 launched in 2023, helps software developers write, test, and debug code at scale. It has become a central tool in what the technology industry has taken to calling the "vibe coding" era — a shorthand for AI-assisted development workflows that have rapidly transformed how software is built.

Cursor president Oskar Schulz underscored the appeal of the arrangement from his company's perspective: "The SpaceX team has an enormous amount of compute and we think together we can scale up our model efforts and we're really excited about it. We really like their team."

Cursor's Valuation and Meteoric Rise in the ‘Vibe Coding’ Era

Prior to the SpaceX announcement, Cursor had been in advanced discussions with investors to raise approximately $2 billion in fresh funding at a valuation exceeding $50 billion. Andreessen Horowitz was set to co-lead the round, with Nvidia and Thrive Capital also expected to participate — notable given that both Andreessen and Nvidia are existing backers of xAI.

Founded in 2023, Cursor has emerged as one of the fastest-growing startups in the AI ecosystem, riding a surge in demand for tools that enhance developer productivity. Its AI assistant enables programmers to write, debug and refine code with unprecedented efficiency, positioning the company at the centre of what industry insiders describe as the “vibe coding” movement.

Cursor president Oskar Schulz highlighted the technological synergy underpinning the deal: “The SpaceX team ‘has an enormous amount of compute and we think together we can scale up our model efforts and we’re really excited about it,’” adding, “We really like their team.”

What the SpaceX–Cursor Deal Actually Involves

SpaceX may either complete a full acquisition of Cursor at a $60 billion valuation or channel $10 billion into a collaborative research and product effort. The company framed the arrangement in unambiguous terms: "SpaceXAI and @cursor_ai are now working closely together to create the world's best coding and knowledge work AI."

Cursor's chief executive, Michael Truell, confirmed the partnership on X, writing that he is "excited to partner with the SpaceX team to scale up Composer" — a reference to Cursor's proprietary AI model. "A meaningful step on our path to build the best place to code with AI," Truell added.

SpaceX's Rapid AI Expansion Since Merging With xAI

Tuesday's announcement is the latest chapter in SpaceX's accelerating transformation into an AI conglomerate. The company merged with xAI in February in a transaction Musk valued at $1.25 trillion — a figure subsequently reported by the New York Times. Before that, Musk had used xAI to absorb his social network X, formerly known as Twitter, in an all-stock deal announced in March 2025.

The Cursor agreement arrives less than a week before Musk is due in court in Northern California for a high-profile legal dispute with OpenAI chief executive Sam Altman — whose company was among Cursor's earliest investors.

IPO Ambitions and Market Implications

The deal also carries broader implications for SpaceX’s expected debut on public markets. By bolstering its AI credentials, the company may seek to command a premium valuation from investors eager to gain exposure to the next phase of artificial intelligence growth.

If executed, the acquisition would rank among the largest in the history of the AI sector, signalling that competition is shifting from incremental innovation to large-scale consolidation.

With Elon Musk preparing for a high-profile legal confrontation involving OpenAI leadership in Northern California, the stakes in the AI race appear higher than ever. The Cursor agreement suggests that SpaceX intends not merely to participate in that race, but to reshape its trajectory.