Less than a week after the largest IPO in history, Elon Musk's first major post-listing deal is a $60 billion all-stock bet on a four-year-old startup founded by MIT dropouts.
SpaceX has agreed to buy Cursor, the AI coding startup used by more than half of the Fortune 500, for $60 billion in an all-stock deal – the first major acquisition Elon Musk’s rocket and satellite company has made since its record-breaking debut on the Nasdaq.
The deal, announced Tuesday, lands less than a week after SpaceX raised $85 billion in what is now the largest IPO in history, closing Monday at a $2.5 trillion valuation – just below Amazon and above Meta and Tesla.
It also marks the moment Musk’s AI ambitions stop running on borrowed time.
Why SpaceX wanted Cursor
Cursor was founded in 2022 by Michael Truell and three MIT classmates who dropped out to build an AI-native code editor – a tool that lets developers write, edit, and refactor code through natural-language instructions rather than line-by-line typing.
The pitch landed. By November 2025, the company said its annualized revenue had multiplied by 10 in less than a year to cross $1 billion, with millions of developers on the product and customers including OpenAI, Spotify, and Instacart.
For SpaceX, the appeal is less about revenue and more about catching up. Grok, the chatbot built by xAI – which merged into SpaceX in February – has continued to lag behind models from Anthropic, OpenAI, and Google, especially on coding. Cursor was brought in to help fix that in April, as part of a broader shake-up at xAI that saw cofounders and engineers leave.
Musk has since posted on X that new versions of Grok have improved after being trained on “a lot” of Cursor data.
The April partnership also embedded the acquisition path inside the contract itself. SpaceX took an option to either buy Cursor outright for $60 billion or pay $10 billion for the joint compute and AI-training work – a structure that effectively gave Musk first refusal on one of the fastest-growing software companies on record.
A $60 billion all-stock bet
On Tuesday, SpaceX exercised that option.
“We are excited to share that SpaceX has exercised their option to acquire Cursor in an all-stock transaction with the goal of building the world’s most useful AI models,” Truell, Cursor’s 25-year-old cofounder and CEO, wrote in a note to employees. He added that the team looks “forward to working closely with the SpaceX team to advance our frontier AI capabilities and continue to work closely with our customers and partners.”
In a separate post, Truell described the next phase as scaling Cursor’s in-house model, Composer, on SpaceX’s infrastructure. SpaceX, on its corporate X account, framed the combined effort as building the “world’s best coding and knowledge work AI.”
Internally, Truell has been more candid – telling Cursor employees the merger represents “a big risk, or a big bet, that we’re making.”
It is a bet on both sides. For Cursor, an all-stock deal ties the fate of one of the most valuable private AI startups to the swings of a newly public mega-cap. For SpaceX, $60 billion in fresh stock is a significant slice of its market cap to spend on a four-year-old company – even one that has quietly become the default tool in the AI coding stack.
What’s next
The deal is expected to close later this year. When it does, Cursor will become the AI software layer inside a company that already controls one of the world’s largest satellite networks, a fleet of reusable rockets, and – through the xAI absorption – a frontier-model lab and a social platform.
It also locks in a pattern Musk has been pushing for the better part of a year: compressing rockets, satellites, chatbots, and now developer tools into one balance sheet.
For founders watching from the outside, the more interesting signal is at the other end of the deal. A company started by four students who left MIT in 2022 has, in under four years, become strategic enough that the largest IPO in history exists in part to fund its purchase. The arc from dropout to $60 billion exit used to take a decade. Cursor did it in less than half that – and turned its first major buyer into the one writing the rocket company’s AI roadmap.
Steven Bartlett is an investor in both Founded and SpaceX
