Elon Musk's SpaceX strikes $60 Billion Cursor deal: What it means for AI and space technology - CNBC TV18

Under the agreement, Cursor stands to gain either a substantial capital injection or a full acquisition.SpaceX has announced a deal with code-generation startup Cursor that could lead to a $60 billion acquisition. The agreement, revealed in a social media post, outlines two options - either the rocket and satellite company acquires Cursor later this year for $60 billion or invests $10 billion for their new partnership.

The announcement comes at a time when SpaceX, led by Elon Musk, is reportedly preparing for a massive initial public offering (IPO), which could be one of the largest in history. It remains unclear whether the Cursor deal will be finalised before or after the IPO, expected as early as June, The New York Times reported.

SpaceX said partnering with Cursor would help it to "to create the world's best coding and knowledge work AI."

In a post on X, SpaceX wrote, "The combination of Cursor's leading product and distribution to expert software engineers with SpaceX's million H100 equivalent Colossus training supercomputer will allow us to build the world's most useful models. Cursor has also given SpaceX the right to acquire Cursor later this year for $60 billion or pay $10 billion for our work together."

The vibe coding startup has already raised over $3 billion in funding and was recently in discussions to secure additional investment, as per a report in Axios.

On X, the co-founder and the chief executive of Cursor, Michael Truell, said he was excited about partnering with SpaceX, calling it a significant step. "Excited to partner with the SpaceX team to scale up Composer. A meaningful step on our path to build the best place to code with AI," he wrote.

While Cursor specialises in AI-powered coding, seemingly far removed from SpaceX's core business of rockets and satellite internet, this move reflects Musk's growing interest in artificial intelligence. Having previously co-founded OpenAI and later launching xAI, Musk has increasingly linked advancements in AI.

Recently, SpaceX has already taken steps toward integrating AI into its ecosystem, including the acquisition of xAI and plans for AI data centres and an AI chip factory.

Founded in 2022 by Truell, Sualeh Asif, Aman Sanger and Arvid Lunnemark, Cursor has quickly emerged as a leading player in AI coding tools. The company achieved rapid growth, reaching $100 million in annual recurring revenue within two years and attracting billions in funding from major investors.

However, increasing competition from companies like OpenAI and other AI firms has put pressure on Cursor. The partnership with SpaceX is expected to provide access to xAI's infrastructure.

In a blog post, the startup said, "We've wanted to push our training efforts much further, but we've been bottlenecked by compute. With this partnership, our team will leverage xAI's Colossus infrastructure to dramatically scale up the intelligence of our models."

Under the agreement, Cursor stands to gain either a substantial capital injection or a full acquisition.