Elon Musk’s SpaceX has agreed to acquire Cursor, an artificial intelligence startup specializing in autonomous coding tools, in a $60 billion all-stock transaction. The deal follows SpaceX’s record-breaking initial public offering (IPO) last week, which significantly boosted the company’s market capitalization and positioned it among the top five public companies by value.

SpaceX announced in April that it held the right to purchase Cursor’s parent company, Anysphere, or alternatively pay $10 billion to collaborate with the startup. Leveraging this option, SpaceX moved forward with the acquisition shortly after its IPO, which saw the company’s stock rise sharply. As of Tuesday, SpaceX’s market value reached $2.8 trillion, surpassing major competitors in e-commerce and technology sectors.

Cursor was founded in 2022 by four Massachusetts Institute of Technology graduates and is headquartered in San Francisco. The startup developed an AI coding assistant that enables users to write code through verbal instructions, popularizing a process dubbed “vibe coding.” This technology allows users without traditional programming expertise to build applications and websites by communicating in natural language. Cursor’s platform gained rapid adoption, generating approximately $4 billion in annualized revenue.

Initially, Cursor’s interface integrated multiple external AI models, including those from competitors such as Anthropic and OpenAI, prompting skepticism about its ability to establish an independent footing within the AI ecosystem. In response, Cursor introduced its own AI agent, Composer, in late 2025, directly competing with products like Anthropic’s Claude Code and OpenAI’s Codex.

The acquisition is expected to strengthen SpaceX’s AI capabilities, particularly benefiting its xAI division and enhancing its chatbot Grok, which currently trails behind rivals in capabilities and market adoption. The companies are collaboratively developing a new AI model slated for release on both Cursor and Grok Build, an AI coding tool developed by xAI. Cursor has also expressed that the partnership will enable it to expand its AI products using SpaceX’s extensive data center infrastructure known as Colossus.

Despite the strategic rationale, some market observers criticized the transaction as an aggressive acquisition fueled by SpaceX’s tightly controlled public float and soaring share price rather than underlying business fundamentals. SpaceX’s limited public share availability and rapid stock appreciation effectively lowered the acquisition’s cost by enabling the company to use its inflated stock to finance the deal without spending cash.

In parallel to these developments, SpaceX has faced challenges with Grok’s adoption, leading to the company leasing excess data center capacity to other AI firms, including a reported $1.25 billion-per-month agreement with Anthropic.

The merger is anticipated to finalize during the third quarter of 2026, further signaling SpaceX’s intent to expand its footprint beyond aerospace into the competitive artificial intelligence landscape.