SpaceX and Cursor have entered into a partnership centred on artificial intelligence development, with both companies saying they will work together on coding and knowledge work systems while also structuring a deal that gives SpaceX the right to acquire Cursor later this year for $60 billion or, alternatively, pay $10 billion for the collaboration.
Partnership Built Around Compute and Model Training
In a post on X, SpaceX said the two companies were now working closely to build what it described as the world’s best coding and knowledge work AI. Cursor, in its own statement, said the partnership would help accelerate its model training efforts, which it said had been constrained by a lack of compute.
The company added that it would use xAI’s Colossus infrastructure to scale up the intelligence of its models. Cursor had recently been reported to be raising a $2 billion round at a $50 billion valuation to increase compute capacity, but that fundraising effort would now be halted because the SpaceX deal would provide the compute it needed for expansion.
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Acquisition Option Tied to Broader Musk Strategy
SpaceX may have opted to buy the rights to acquire Cursor, rather than complete an immediate acquisition, because a transaction of that size could require it to refile for an initial public offering. Reports suggest a SpaceX IPO could take place between April and June, ahead of possible listings by OpenAI and Anthropic.
Elon Musk has consolidated several businesses over the past year in pursuit of a mooted $1.75 trillion valuation. In February, SpaceX acquired xAI, which had previously acquired X in March 2025. Revenue growth from Starlink is described as a major pillar of that valuation, with the satellite broadband service said to have more than 9,000 satellites in orbit and about 9 million customers.
Cursor’s Position in the AI Market
The February merger valued xAI at about $250 billion, though it was followed by the departure of all 11 of Musk’s co-founders from that company. Musk now appears to be seeking talent and capabilities he believes are necessary to compete with major rivals.
Cursor is described as one of the fastest-growing AI start-ups, with backing from investors including Nvidia, Andreessen Horowitz, Google and OpenAI’s venture fund. It remains uncertain whether the full acquisition will go ahead or whether the two sides may instead proceed with the alternative arrangement under which SpaceX would pay $10 billion for what it called “our work together”.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
