SpaceX Invests $60B in AI Startup Cursor Ahead of Major IPO Push

SpaceX, best known for its rocket business, is expanding its focus on artificial intelligence as it gears up for a highly anticipated initial public offering (IPO). The company announced a new working relationship with Cursor, an AI coding startup, which includes an option to purchase the company for $60 billion. If SpaceX opts not to acquire Cursor, it will pay the startup $10 billion for its services.

In a social media post on Monday afternoon, SpaceX stated,

"The combination of Cursor’s leading product and distribution to expert software engineers with SpaceX’s million H100 equivalent Colossus training supercomputer will allow us to build the world’s most useful models."

The announcement follows SpaceX’s acquisition of xAI, Elon Musk’s AI venture, which operates the Grok chatbot. This strategic move comes as SpaceX prepares for what is expected to be a record-setting IPO later in 2025, potentially generating billions in revenue.

What is Cursor and How Does It Work?

Cursor is an independent AI startup specializing in AI-powered software development tools. Its flagship product, Composer, functions similarly to Anthropic’s Claude Code and OpenAI’s Codex, enabling developers to write, debug, and edit code using AI assistance.

Composer learns a developer’s coding style and can autofill, review, and edit code as needed. Users can switch between different AI models, though this flexibility has contributed to higher operational costs for Cursor. The tool has gained significant popularity among tech companies, earning a cult-like following. However, critics point out that Composer can be slow when handling larger codebases. Additionally, Cursor faced a public relations setback when its customer support AI generated false information, leading to a wave of cancellations.

Financial Challenges in the AI Sector

Despite the enthusiasm surrounding AI, many companies in the sector are facing substantial financial losses. For example, xAI reported a net loss of $1.46 billion in the quarter ending September 30, 2025, following a $1 billion loss in the previous quarter. These financial challenges highlight the high costs associated with developing and maintaining advanced AI systems.

In 2025, more than 60% of SpaceX’s revenue is projected to come from its Starlink satellite internet service, according to confidential IPO documents. However, the company is clearly diversifying its focus, placing a heavy emphasis on AI as it approaches its IPO.

Cursor’s Rapid Rise and Founding Team

Cursor was founded in 2023 by four graduates of the Massachusetts Institute of Technology (MIT), all of whom were in their 20s at the time. The startup quickly gained attention in the tech industry, raising $2.3 billion in funding during a November 2024 round led by investors including Nvidia and Google. At the time of the funding round, Cursor was valued at $29.3 billion—a figure that is now dwarfed by SpaceX’s acquisition offer.

Prior to this deal, Cursor had reportedly resisted takeover offers from major AI companies. Michael Truell, Cursor’s co-founder and chief executive officer, previously stated,

"All of the AI labs are important partners to us."

Following the announcement of the SpaceX partnership, Truell took to X (formerly Twitter) to express his enthusiasm, writing,

"Excited to partner with the SpaceX team to scale up Composer. A meaningful step on our path to