SpaceX works with Cursor and has an option to buy the startup for $60 billion

SpaceX said it has struck a deal with Cursor to develop next-generation “coding and knowledge work AI,” which includes a surprising provision — an option to buy the popular software development platform later this year for $60 billion.

Partnering with, and potentially buying, the leader in the hottest artificial intelligence product category can only be seen in the context of SpaceX’s long-awaited public offering. Investors looking for more value in an IPO may see its tie-up with Cursor as another way to extract value from Elon Musk’s ever-expanding tech conglomerate.

The deal won’t shock industry watchers. Last week it was reported that xAI would launch computing power rental from data centers to Cursor, uses tens of thousands of xAI chips to train the latest AI model with a coding startup. And last month, two of Cursor’s top engineering leaders, Andrew Milich and Jason Ginsberg, He left the company to join xAIwhere both report directly to Musk.

SpaceX described the partnership as a project that combines Cursor’s “product and distribution to specialist software engineers” with SpaceX’s Colossus supercomputer, which the company claims has the computing power of one million Nvidia H100 chips.

SpaceX also said it will either pay Cursor $10 billion for its work or buy the company for $60 billion at an undisclosed point later this year. TechCrunch last week informed that Cursor was expecting a valuation of $50 billion in an upcoming private fundraising round. This figure itself represents an amazing series of leaps. Cursor was valued at just $2.5 billion in January of last year, rising to $9 billion by May of last year and set at a post-money valuation of $29.3 billion when it closed on $2.3 billion in Series D funding in November.

Both figures would represent a significant cost for SpaceX, which has been losing money since the acquisition of social media network xAI and X, and is planning a major capital investment. The brief statement did not say whether either deal was paid for in SpaceX stock.

Meanwhile, the move can reinforce weaknesses in each company, but it also exposes them. Neither Cursor nor xAI have proprietary models that can match the leading offerings from Anthropic and OpenAI—the same companies that now compete directly with Cursor for the developer market.

Cursor still uses and sells the Claude and GPT models.