SpaceX partners with Cursor, eyes $60B acquisition

SpaceX has struck a deal with Cursor to develop a coding and knowledge work AI. Under the terms of the agreement, SpaceX will either pay Cursor $10 billion for its work or acquire the company for $60 billion at some undisclosed point later this year. The arrangement gives SpaceX an option to buy the software development platform for $60 billion. This dual-path structure allows SpaceX to either secure the startup’s technology through a direct payment or execute a full buyout.

The partnership follows several recent moves to integrate the operations of Elon Musk’s companies with the startup. Last week, it was reported that xAI would begin renting computing power to Cursor. Additionally, last month, two former Cursor engineering leaders, Andrew Milich and Jason Ginsberg, left the company to join xAI. These personnel and infrastructure shifts have drawn the companies closer together ahead of the formal partnership.

The deal comes amid a rapid rise in Cursor’s valuation, even as SpaceX is widely seen to be losing money following its acquisitions of xAI and the social media network X. According to TechCrunch, Cursor was recently eyeing a $50 billion valuation in an upcoming private fundraising round. The startup’s valuation history highlights this trajectory:

• January of last year: Valued at $2.5 billion
• Last May: Valued at $9 billion
• November: Reached a $29.3 billion post-money valuation—defined as the company’s value after receiving external investment—following a $2.3 billion Series D funding round, which represents a late-stage funding round.

This rapid escalation in value underscores the intense investor interest in the developer tool sector, even as SpaceX navigates its own financial pressures.

The deal highlights a strategic effort to address weaknesses in the models of both companies. Currently, both Cursor and xAI compete against industry leaders like Anthropic and OpenAI in the developer market. By aligning their resources, the companies may seek to establish a more competitive position against these established rivals.

Why it matters

Partnering with and potentially purchasing a leader in the hottest AI product category is a strategic move to extract value from Elon Musk’s sprawling tech conglomerate ahead of SpaceX’s much-anticipated public offering.