SpaceX Has Deal for Right to Acquire Cursor for $60 Billion

(Bloomberg) -- SpaceX said it has an agreement giving it the right to acquire artificial intelligence startup Cursor for $60 billion later this year or to pay $10 billion for the companies' work together, part of the Elon Musk-run firm's efforts to catch up with rivals in AI coding tools.

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Musk's rocket, satellite and artificial intelligence giant announced the deal in a post on X, saying the two companies are "now working closely together to create the world's best coding and knowledge work AI."

SpaceX recently merged with xAI, Musk's artificial intelligence company, which competes with Anthropic and OpenAI in creating generative AI tools for consumers and businesses. The deal comes shortly after Musk said that xAI is behind on software coding tools compared with peers and vowed to rebuild the company from the ground up. In March, he ordered a round of layoffs. He's also been seeking engineering talent, and has previously hired from Cursor.

SpaceX isn't acquiring Cursor immediately because of the rocket company's imminent initial public offering, according to a person familiar with the matter, who asked not to be identified discussing nonpublic information. A major transaction would require the company to update its filings and financial details, potentially delaying the IPO, which is targeting a $2 trillion valuation. The $10 billion is a breakup fee if the deal doesn't go through, according to people with knowledge of the deal. SpaceX and xAI didn't immediately respond to a request for comment.

Cursor had been in talks with investors to raise about $2 billion in a funding round with a valuation of more than $50 billion, not including the investment, Bloomberg reported last week. The company is no longer proceeding with the round, because the capital was set to fund Cursor's computing needs -- which are now being handled by xAI -- according to a person familiar with the matter.

Cursor's AI assistant, launched in 2023, helps programmers write and debug code more efficiently. It's become one of the fastest-growing startups of all time and a central player in tech's "vibe coding" era, as demand surges among software developers for tools that can build based on prompts to a chatbot.

But coding with AI requires a lot of computing resources -- something SpaceX has plenty of, with its massive data centers in Tennessee and Mississippi. 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," Cursor president Oskar Schulz said. "We really like their team."