SpaceX Pays $10B for the Right to Buy Cursor at $60B

The AI Coding Startup CEO, Michael Truell, called it a meaningful step on the startup path to build the best place to code with AI

SpaceX has secured the right to purchase AI coding startup Cursor for $60 billion before the end of 2026, or walk away after paying $10 billion for nine months of joint work. The deal gives Cursor immediate access to Colossus, SpaceX's supercomputer network with compute equivalent to one million Nvidia H100 GPUs.

"SpaceXAI and @cursor_ai are now working closely together to create the world's best coding and knowledge work AI," SpaceX wrote Tuesday, April 21, on X. "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."

Cursor CEO Michael Truell confirmed the partnership on X, writing he's "excited to partner with the SpaceX team to scale up Composer," referring to Cursor's AI model for software development. In a blog post published the same day, Cursor explained why the company needed the deal. "We've wanted to push our training efforts much further, but we've been bottlenecked by compute," the company wrote. "With this partnership, our team will leverage xAI's Colossus infrastructure to dramatically scale up the intelligence of our models."

Cursor is simultaneously raising $2 billion at a $50 billion valuation, CNBC reported Sunday, April 19, with Andreessen Horowitz co-leading the round. The deal structure means Cursor agreed to a maximum acquisition price of $60 billion while actively raising capital at $50 billion. That limits potential upside to 20 percent.

The tradeoff is compute access that would cost hundreds of millions of dollars to replicate. "We released Composer less than six months ago as our first agentic coding model," Cursor wrote in its blog post. "After that, Composer 1.5 scaled reinforcement learning by over 20x. Composer 2 then added continued pretraining, reaching frontier-level performance at a fraction of the cost of other models. Each step up in compute has translated to meaningfully more capable models."

The $10 billion payment structure protects SpaceX regardless of outcome. If SpaceX buys Cursor for $60 billion, the $10 billion counts toward the purchase price. If SpaceX walks away, it still receives nine months of joint development work, including access to Cursor engineers and product improvements. Cursor, founded in 2022, announced in November it had reached $1 billion in annual recurring revenue with over 300 employees.

SpaceX merged with xAI in February and filed confidentially for an IPO in April. The Cursor partnership addresses a talent gap. SpaceX hired two former Cursor product engineering leads in March, Andrew Milich and Jason Ginsburg, who now report directly to Elon Musk and xAI president Michael Nicolls, according to Business Insider. At a conference in March, Musk said Grok, xAI's chatbot, "is currently behind in coding."

The deal positions SpaceX to compete directly with OpenAI and Anthropic in building AI systems for software development. OpenAI was an early investor in Cursor, making the SpaceX partnership a shift in alignment. Cursor already has hundreds of thousands of developers using its tools daily, giving SpaceX immediate distribution if it exercises the $60 billion acquisition option.

SpaceX can exercise the option anytime before the end of 2026. The alternative $10 billion payment gives SpaceX nine months to evaluate whether Cursor's technology and team are worth the $60 billion price tag while guaranteeing Cursor the compute access it said was preventing further model development.