SpaceX announced on April 21 that it has struck a deal with AI coding startup Cursor to develop what the company calls “the world’s best coding and knowledge work AI.” The deal includes an option for SpaceX to acquire Cursor for $60 billion later this year, or alternatively pay $10 billion for the joint development work, according to TechCrunch.
The Deal Structure
The arrangement is unusual for its optionality. SpaceX is not committing to an acquisition upfront. Instead, it has secured the right to choose between two outcomes at an undisclosed point later this year: a full $60 billion acquisition or a $10 billion payment for partnership work. Neither TechCrunch nor CNBC reported whether either payment could be made in SpaceX stock.
Cursor CEO Michael Truell posted on X that he was “excited to partner with the SpaceX team to scale up Composer,” referring to Cursor’s AI model. SpaceX described the partnership as combining Cursor’s “product and distribution to expert software engineers” with SpaceX’s Colossus supercomputer, which the company claims has compute power equivalent to a million Nvidia H100 chips, according to TechCrunch.
Cursor’s Valuation Trajectory
The numbers tell the story of agentic coding’s explosive growth. Cursor was valued at $2.5 billion in January 2025, $9 billion by May 2025, and $29.3 billion when it closed $2.3 billion in Series D funding in November 2025, per TechCrunch. Last week, CNBC confirmed the company was in talks to raise $2 billion at over $50 billion. The $60 billion acquisition option represents another 20% premium above that.
That is a 24x increase in roughly 12 months.
Pre-IPO Context
The deal cannot be separated from SpaceX’s IPO plans. Elon Musk merged SpaceX with his AI startup xAI in February in a transaction he valued at $1.25 trillion, according to CNBC. The combined company is now planning what is expected to be a record public offering.
The relationship between the two companies has been deepening for weeks. Business Insider reported that xAI began renting computing power from its data centers to Cursor, with the coding startup using tens of thousands of xAI chips to train its latest AI model. Two of Cursor’s most senior engineering leaders, Andrew Milich and Jason Ginsberg, left the company to join xAI, where both report directly to Musk, per TechCrunch.
The Competitive Gap
As TechCrunch notes, neither Cursor nor xAI currently has proprietary models matching the leading offerings from Anthropic and OpenAI, the same companies now competing directly with Cursor for the developer market. Cursor still uses and sells access to Claude and GPT models even as both firms roll out their own coding tools.
The SpaceX partnership, with its access to Colossus compute, may be designed to close that gap. When hardware companies are acquiring coding agent startups at $60 billion valuations, the agentic coding market has crossed from hype into strategic infrastructure.
The announcement arrives less than a week before the trial in Musk v. Altman begins, according to CNBC. OpenAI was an early investor in Cursor.