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

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

The partnership with a leader in the most sought-after and potentially purchased AI 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 their deal with Cursor as another way to extract value from Elon Musk’s sprawling technology stack.

The deal will not shock those who follow the industry closely. Last week, it was reported that xAI will begin leasing computing power from its data centers to Cursor, with programming to begin using tens of thousands of xAI chips to train its latest AI model. Last month, two of Cursor’s senior engineering leaders, Andrew Milich and Jason Ginsberg, left the company to join xAI, where they both report directly to Musk.

SpaceX described the partnership as a project that combines “Cursor’s product and distribution to expert software engineers” with SpaceX’s Colossus supercomputer, which the company claims has the computational power equivalent to 1 million Nvidia H100 chips.

SpaceX also said that at some undisclosed point later this year, it will either pay Cursor $10 billion for its work or acquire the company for $60 billion. Last week, TechCrunch reported that Cursor was eyeing a $50 billion valuation in its upcoming private fundraising round. This number in itself reflects an amazing series of jumps. Cursor was valued at just $2.5 billion in January of last year, had risen to $9 billion by last May, and was assigned a post-money valuation of $29.3 billion when it closed on $2.3 billion in Series D funding in November.

Either number would represent a major outlay for SpaceX, which is widely seen as losing money after acquiring xAI and social network X and is planning a large-scale capital investment. The brief statement did not say whether either deal could be paid for with SpaceX shares.

Meanwhile, the move can reinforce each company’s weaknesses, 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 in the developer market.

Cursor is still using and selling access to Claude and GPT models even as both companies roll out their own programming tools, an odd arrangement that SpaceX’s new partnership may be designed to eventually escape.