Elon Musk likens himself to Iron Man, so why not assemble the AI Avengers?
A day after SpaceX announced a deal with coding startup Cursor, BI’s Grace Kay has the scoop on another AI startup Musk has explored teaming up with.
XAI, Musk’s AI startup housed in SpaceX, held discussions in recent weeks with French AI startup Mistral and Cursor about a potential three-way partnership, people familiar with the matter said.
(Grace also had the scoop last week on a computing arrangement between SpaceX and Cursor. Save yourself the time. Follow her coverage here.)
Musk’s strength-in-numbers strategy is aimed at supercharging xAI’s efforts to go head-to-head with OpenAI and Anthropic. Doing that in such a competitive environment might sound counterintuitive, but there are clear benefits for both sides.
Musk has amassed one of the largest data center footprints in the AI race. He wants to build the world’s largest supercomputer in Memphis, and is putting serious money behind it. Around this time last year, BI reported he’d already spent at least $400 million on the effort.
With compute at a premium, that’s a goldmine for a young startup looking for the power to train its models.
As for xAI, things haven’t been going great. The company’s gone through multiple reorgs this year as all of Musk’s fellow cofounders have exited. The Cursor deal is a chance for xAI to get close to a proven, successful AI coding product.
Don’t just take my word for it. Here’s what smart people are saying about it.
So is Musk done cutting deals or just getting started?
When you’re the richest man in the world, nothing is off the table from a financial perspective. And there are plenty of other AI coding startups that have drawn significant interest from the tech world.
The SpaceX-Cursor deal structure does give Musk an out if he sours on the idea. SpaceX could pay Cursor $10 billion for the work it’s doing if it doesn’t end up wanting to spend $60 billion on an outright acquisition.
If Musk does continue his shopping spree, his competitors could step in as well. OpenAI already has a few buzzy deals under its belt this year, from nabbing OpenClaw’s creator to buying a talk show.
As for the startups, the industry seems destined to consolidate. Locking in a payday might not be the worst outcome. That’s especially true if you can spark a bidding war.
Of course, you could end up getting bought by one of two men who are currently heading to court … over an AI startup.
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