SpaceX has formally agreed to acquire AI coding start-up Cursor in a deal valuing the firm at US$60 billion (A$85 billion). This acquisition is seen as a crucial step in Elon Musk’s broader strategy to enhance his company’s coding tools and narrow the gap with competitors. Cursor investors will receive SpaceX stock based on the implied equity value, according to a company filing made on Tuesday. The merger is anticipated to finalise in the third quarter of 2026.
The transaction comes just days after SpaceX completed its highly-anticipated initial public offering, with the rocket company’s stock surging since its Friday trading debut, reflecting strong investor demand. SpaceX’s xAI business is prioritising the strengthening of its artificial intelligence-powered coding capabilities. Cursor is an AI coding start-up whose AI assistant, launched in 2023, is designed to help programmers write and debug code more efficiently. It has become a significant player in the rapidly evolving landscape of AI-driven developer tools, particularly in the “vibe coding” era. Musk himself has previously stated that xAI trails rivals in this area, actively recruiting engineers from Cursor to compete with companies such as Anthropic PBC and OpenAI.
Musk’s substantial investments in artificial intelligence have proven costly for SpaceX, which reported a US$4.94 billion net loss last year. This loss was partly due to the company retroactively absorbing the debt from xAI’s investments. Capital expenditures aimed at fuelling Musk’s ambitious plans nearly doubled to US$20.7 billion last year, with AI initiatives accounting for the largest portion of this spending. Before the acquisition agreement, Cursor was reportedly in discussions with investors to secure approximately US$2 billion in funding at a valuation exceeding US$50 billion, plans which were subsequently abandoned with xAI now set to manage its future computing requirements.
