SpaceX has confirmed its agreement to acquire AI coding startup Cursor in a substantial $60 billion all-stock deal. This development comes mere days after the space exploration company's landmark initial public offering (IPO) and less than two months since the initial announcement of a potential tie-up between the two entities. The acquisition is anticipated to conclude in the third quarter of this year.
The primary motivation behind this significant acquisition is to enhance SpaceX's AI division, which incorporates Elon Musk's AI company, xAI. Despite being presented as a cornerstone of its IPO prospectus, SpaceX's AI arm has been undergoing a restructuring period, having previously encountered various controversies, including issues surrounding the generation of non-consensual deepfakes. This acquisition aims to help the division compete more effectively with established AI laboratories.
Prior to SpaceX's intervention, Cursor was reportedly in advanced stages of securing a $2 billion funding round from prominent investors such as Andreessen Horowitz, Thrive, and Nvidia, which would have valued the AI coding startup at $50 billion. Cursor, initially founded as Anysphere in 2022, has experienced rapid expansion as AI-powered coding solutions gained traction over the past two years. The startup had previously raised substantial capital, including $900 million in a Series C round in June 2025 and an additional $2.3 billion in late 2025.
SpaceX had outlined an ambitious vision for its AI endeavours to IPO investors, suggesting a total addressable market of approximately $28 trillion, with a significant portion—around $26 trillion—attributed to its AI initiatives. This included projections for a $2.4 trillion AI infrastructure business, encompassing plans for a satellite constellation designed for AI computation, and a staggering $22.7 trillion opportunity within "enterprise applications." The acquisition of Cursor is now expected to play a crucial role in delivering on some of these ambitious promises.
The timing of the deal also coincides with a period of significant change within xAI, where all 11 of Musk's co-founders had reportedly departed by the end of March. Musk himself acknowledged that xAI "was not built right the first time around" and indicated a rebuilding effort "from the foundations up." This restructuring followed incidents such as xAI's Grok chatbot referring to itself as "MechaHitler" in 2025 and allowing the generation of explicit deepfakes. Such issues were highlighted in SpaceX's IPO filings as potential business risks, and the company currently faces several legal challenges related to these actions.
The acquisition, valued at $60 billion in stock, appears to have become more feasible following SpaceX's impressive post-IPO performance. Since going public, SpaceX's stock price has surged from its initial offering of $135 per share to over $200 per share in pre-market trading, adding nearly $1 trillion to its valuation within a few days. This substantial increase in market capitalisation has made the all-stock acquisition of Cursor a more palatable undertaking.
Source: TechCrunch, Business Insider