SpaceX, Elon Musk’s rocket and satellite company, said on Tuesday that it had struck a deal with the artificial intelligence start-up Cursor that could result in its acquiring the young company for $60 billion.
In a social media post, the rocket maker said the combination with Cursor, which makes code-writing software, would “allow us to build the world’s most useful” A.I. models. SpaceX added that the agreement gave it the option “to acquire Cursor later this year for $60 billion or pay $10 billion for our work together.”
SpaceX is making the deal just as it prepares to go public in what is likely to be one of the largest initial public offerings ever. It is unclear if it plans to consummate a transaction with Cursor before or after its I.P.O., which could happen as early as June.
A code-writing start-up has seemingly little to do with rocket launches and a satellite internet service, which are SpaceX’s main businesses. But Mr. Musk has been increasingly interested in A.I. The tech mogul helped found OpenAI, the company behind ChatGPT, and in recent years established xAI, which created the Grok chatbot.
Since last year, Mr. Musk has also pushed SpaceX toward A.I. initiatives, including A.I. data centers that would orbit Earth and an A.I. chip factory. In February, SpaceX bought xAI, creating a company that valued itself at $1.25 trillion.
Mr. Musk, 54, has said he sees his goals in space and A.I. as intertwined. In a letter to SpaceX employees announcing the acquisition of xAI, he wrote that humans would become a multiplanetary species only after data centers were deployed in space to better harness the sun’s energy.
“In the long term, space-based A.I. is obviously the only way to scale,” Mr. Musk wrote.
Mr. Musk and SpaceX did not return requests for comment.
Michael Truell, a co-founder and the chief executive of Cursor, posted that the deal was “a meaningful step on our path to build the best place to code with AI.”
While Mr. Musk’s companies — which also include Tesla — have a history of merging with one another, they rarely strike deals to buy outside companies.
But A.I. coding tools have become increasingly popular. Anthropic, a San Francisco start-up, has seen a surge in revenue from its coding product, Claude Code, which it has been selling to businesses. OpenAI has poured money into its own coding tool, Codex, and has also aggressively courted businesses.
(The New York Times sued OpenAI and Microsoft in 2023, claiming copyright infringement of news content related to A.I. systems. The two companies have denied those claims.)
Mr. Musk’s xAI has also been trying to develop coding tools. But the venture has faced an employee exodus and has fallen behind OpenAI and Anthropic. In March, xAI hired Andrew Milich and Jason Ginsberg, two former leaders at Cursor, to help refocus those efforts.
After the hires were announced, Mr. Musk posted that “xAI was not built right first time around, so is being rebuilt from the foundations up.”
Cursor, which is based in San Francisco, was founded in 2022 by Mr. Truell, Sualeh Asif, Aman Sanger and Arvid Lunnemark, who had met at M.I.T. The start-up quickly made waves as tech companies adopted its tools. Cursor emerged as an early leader in its field, hitting $100 million in “annual recurring revenue,” or monthly revenue extrapolated to a full year, in less than two years.
It soon became a venture capital darling, amassing $3.4 billion in funding from top investment firms including Thrive Capital, Andreessen Horowitz and Accel. In November, Cursor reached a valuation of $29 billion.
The start-up had been in talks to raise new funding in recent weeks, a person with knowledge of the matter said. But the rival coding tools from Anthropic and OpenAI created competitive pressure for the much smaller start-up. Under its agreement with SpaceX, Cursor could obtain either a $10 billion injection of new capital or the $60 billion payday if the rocket company buys it.
Cursor said in a blog post on Tuesday that its lack of access to computing power for training its A.I. models had “bottlenecked” its growth. The deal with SpaceX will give it access to xAI’s infrastructure, which includes a supercomputer capable of training A.I. models.
That will help Cursor “dramatically scale up the intelligence of our models,” the start-up said.
Erin Griffith covers tech companies, start-ups and the culture of Silicon Valley from San Francisco.
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