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SpaceX’s mega rocket Starship prepares for a test flight from Starbase, Texas on Nov. 18, 2024. (Eric Gay \/ Associated Press) <\/p>\n SpaceX’s mega rocket Starship prepares for a test flight from Starbase, Texas on Nov. 18, 2024. (Eric Gay \/ Associated Press) <\/p>\n
Elon Musk\u2019s SpaceX has acquired Cursor, an autonomous coding startup for $60 billion in an all-stock deal, allowing the space exploration and AI company to compete against rivals Anthropic and OpenAI after its Wall Street debut last week.<\/p>\n
SpaceX said in April that it had the rights to buy Cursor, or pay $10 billion to \u201cwork together\u201d with the company.<\/p>\n
The Cursor deal comes days after SpaceX\u2019s blockbuster public listing on Friday saw its stock rise 20%. SpaceX\u2019s market capitalization reached $2.8 trillion on Tuesday, eclipsing e-commerce giant Amazon, and made SpaceX the fifth largest<\/a> public company.<\/p>\n Read more: SpaceX shares rise 19% in stock market debut after historic IPO<\/a><\/p>\n San Francisco-based Cursor was launched by software company Anysphere, which was founded in 2022 by four Massachusetts Institute of Technology graduates.<\/p>\n They built an extremely popular AI coding assistant which allowed engineers to instruct the software in English that would subsequently run coding tasks autonomously.<\/p>\n It kick-started the phenomenon of \u201cvibe coding<\/a>\u201d where even users without coding knowledge \u2014 or understanding of software \u2014 could share verbal instruction and build apps and websites. Cursor growth exploded bringing in $4 billion<\/a> in annualized revenue.<\/p>\n But its adoption came with a catch. Cursor\u2019s interface allowed coders to switch between multiple AI models such as Anthropic and OpenAI, and it became a platform that merely hosted other companies AI. It raised questions about Cursor\u2019s ability to build an independent company on top of models provided by larger rivals.<\/p>\n To reduce its reliance on competitors, in late 2025, Cursor introduced its own proprietary AI agent, Composer,<\/a> alongside other third-party coding assistants. Now, Cursor directly competes with Anthropic\u2019s Claude Code and OpenAI\u2019s Codex.<\/p>\n Despite Musk\u2019s backing, xAI\u2019s chatbot Grok\u2019s capabilities are still far behind Claude and ChatGPT. The Cursor deal could spruce up xAI\u2019s positioning in the market, allowing Musk to improve Grok with better coding capabilities and also convince enterprise companies to adopt its AI.<\/p>\n Read more: AI company Anthropic files to list shares, heating up race with OpenAI<\/a><\/p>\n When SpaceX first announced the potential acquisition in April, Cursor said the partnership will enable it to build future AI products using xAI\u2019s massive AI data center complex Colossus, based in Memphis, Tenn.<\/p>\n Earlier Tuesday, SpaceX confirmed<\/a> in an X post that it and Cursor were jointly training an AI model that will be released both on Cursor and Grok Build, an AI coding agent built by xAI.<\/p>\n \u201cThis is the first, but not the last, big exit at the application layer of AI,\u201d Chamath Palihapitiya, an early SpaceX investor, posted on X<\/a>.<\/p>\n SpaceX said that it expects the merger to close during the third quarter of 2026.<\/p>\n After his tumultuous split from OpenAI, Musk built one of the largest data center clusters to power rival chatbot Grok. But Grok\u2019s tepid adoption has resulted in SpaceX renting spare data center capacity to third-parties such as Anthropic, which will pay $1.25 billion per month through May 2029 to operate its chatbot, according to its IPO filing.<\/p>\n Critics of the all-stock acquisition called it a hype-fueled<\/a> shopping spree, devoid of market fundamentals.<\/p>\n Read more: Hiltzik: Here’s how Musk’s SpaceX IPO could crash your 401(k)<\/a><\/p>\n SpaceX went public but only sold 4% of its shares, creating just a tiny supply of shares and massive consumer demand. The share price climbed 20% on Monday, and rose further on Tuesday, closing at $201.80.<\/p>\n \u201cSo the engineered scarcity that pumped the stock now makes the acquisition cheaper. The squeeze pays for the shopping spree. A company losing $4 billion a quarter is now buying AI startups with paper it manufactured out of a 4% float,\u201d Thierry Borgeat, a Zurich-based asset manager posted<\/a> on X.<\/p>\n SpaceX spent zero cash on the $60 billion Cursor purchase. SpaceX raised $75 billion in cash from the public listing.<\/p>\n The Associated Press contributed to this reporting. <\/p>\n