SpaceX has formally agreed to acquire the artificial intelligence coding startup Cursor in a transaction valuing the company at $60 billion, using an all-stock deal. This acquisition, announced just days after SpaceX’s record-breaking initial public offering, is aimed at significantly strengthening its AI division – which was built around Elon Musk’s xAI after their merger earlier this year.
The deal was preceded by an unusual arrangement disclosed in April: SpaceX secured an option to either buy Cursor for $60 billion in stock or pay a $10 billion break-up fee if the deal collapsed. Cursor, founded in 2022, has quickly become a major player in AI-powered coding assistants, reaching $2.6 billion in annualized B2B revenue. Its tools allow developers to generate, review, and debug code using natural language prompts, competing directly with offerings like GitHub Copilot. The startup was also reportedly close to closing a $2 billion funding round at a $50 billion valuation before SpaceX entered the picture.
For SpaceX, the acquisition is a strategic move to close the gap with competitors like OpenAI and Anthropic in the AI coding space. Musk has acknowledged that xAI, now part of SpaceX, trailed rivals in coding-focused AI products. The deal also provides Cursor with access to SpaceX’s vast computing resources. It follows a period of restructuring for SpaceX’s AI unit after controversies over user-generated problematic content.
Investor enthusiasm for the IPO and the AI push pushed SpaceX shares up more than 8% on Tuesday, adding to a 20% surge on their first trading day. The transaction is expected to close in the third quarter of 2026, pending regulatory approvals.
