SpaceX spent $60B on Cursor after its IPO. The AI coding tool has $2.6B in revenue with a shrinking market share. The deal buys distribution xAI lacked.
SpaceX closed its initial public offering last Friday. Six days later, the company agreed to spend $60 billion on a startup it couldn't build itself.
The target is Cursor, an AI coding tool from Anysphere. SpaceX announced the acquisition Tuesday. The deal follows an April arrangement that gave SpaceX the right to buy Cursor for $60 billion or pay a $10 billion breakup fee. Closing is expected in the third quarter of 2026, with Cursor becoming a wholly owned subsidiary, Reuters reported Tuesday.
The acquisition fills a hole left by SpaceX's earlier AI move. In February, SpaceX absorbed xAI, an AI lab also owned by Elon Musk, in a deal that valued the combined entity at $1.25 trillion, CNBC reported Feb. 3. That merger gave SpaceX computing infrastructure, the Colossus supercomputer in Memphis. It did not provide a product with proven traction.
Cursor supplied what xAI lacked: a widely adopted coding tool with a large base of paying professional engineers. The startup carried roughly $2.6 billion in annualized B2B revenue at the time of the deal, with enterprise sales growing, Reuters reported. Customers include Adobe and Stripe. Nvidia CEO Jensen Huang has called Cursor his "favorite enterprise AI service," TechSpot reported Tuesday.
Cursor's market share fell from 41% in June 2025 to about 26% in May, CNBC reported Tuesday, citing spending data from Ramp. Half of the AI coding tool category is now controlled by Anthropic.
The funding round Cursor had been raising from Andreessen Horowitz, Nvidia and Thrive Capital wasn't going to let the startup break even, TechCrunch reported Tuesday. That round did not close.
SpaceX's own AI unit was burning cash. The xAI division posted a $6.35 billion operating loss in 2025 and burned another $2.5 billion in the first quarter of 2026, TechTimes reported Tuesday. The unit also faced controversy: Grok generated harmful content, and afterward all 11 of Musk's xAI co-founders left, Engadget reported Tuesday.
In March, Musk posted on X:
xAI was not built right first time around, so is being rebuilt from the foundations up.
The Cursor deal gives that rebuild a product with proven traction. When SpaceX first announced the April arrangement on X, it framed the combination of Cursor's product and customer base with the Colossus infrastructure as the path to building "the world's most useful [AI] models."
Nvidia is a customer of Cursor. Nvidia stock has been a bellwether for AI infrastructure spending.
The deal is set to close in the third quarter. Cursor will become a wholly owned subsidiary of SpaceX.
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