SpaceX to Buy AI Start-Up for $60 Billion After High-profile IPO
SpaceX said Tuesday it will buy the parent company of artificial intelligence coding startup Cursor for $60 billion, just days after Elon Musk’s rocket and AI company made its record-breaking public market debut.
SpaceX agreed to a deal with Cursor in April that would give it the option to acquire the company, which would allow us to “build the most useful” artificial intelligence models in the world, SpaceX said at the time.
After SpaceX’s initial public offering last week, it went on to acquire all of the shares of Anysphere, Cursor’s parent company. The company’s shares have continued to soar since they opened for trading on Friday, making Mr Musk the world’s first billionaire.
The company is now valued at roughly $2.5 trillion. Its shares rose more than 13 percent in early trading on Tuesday.
SpaceX’s core businesses have been building rocket ships and offering satellite internet, but Mr Musk has increasingly expanded his empire to take advantage of the AI boom.
In 2023, Mr. Musk founded xAI, maker of the Grok chatbot, which was built to compete with rivals such as OpenAI’s ChatGPT and Anthropic’s Claude. An AI start-up has spent billions to catch up. This includes building two massive data centers in Tennessee, computing sites to power the technology, known as Colossus 1 and 2.
In February, Mr Musk merged SpaceX with xAI, which already owned his social media company X. The deal valued the joint venture at more than $1 trillion and fueled Mr. Musk’s desire to build data centers in space.
“The capabilities we unlock by making space data centers a reality will fund and enable self-growing bases on the Moon, an entire civilization on Mars, and ultimately expansion into space,” Musk said in a memo to employees at the time.
Last month, SpaceX outlined plans for the first phase of an AI chip manufacturing project in Texas that would cost at least $55 billion. And because of its massive data centers, SpaceX has signed contracts with Google and Anthropic worth potentially billions of dollars to provide AI computing power.
Still, in filings leading up to SpaceX’s IPO, the company outlined how spending heavily on AI is cutting into profitability.
Mr. Musk’s companies have a history of merging with each other but rarely acquire outside companies. He also runs Tesla, a publicly traded electric car maker, as well as several smaller businesses.
The acquisition of Cursor is expected to close in the third quarter of this year, SpaceX said regulatory filing.
Founded in 2022, Cursor quickly made waves as tech companies adopted its tools. It has raised billions in funding from leading investment firms, including Thrive Capital, Andreessen Horowitz and Accel.
In April, when the potential acquisition was first announced, Cursor he said that its lack of access to computing power to train AI models has “burdened” its growth. A deal with SpaceX would give it access to xAI’s infrastructure.
Adding Cursor to the fold could help the xAI game catch up with coding tools, an area where it falls behind. In March, xAI hired two former Cursor executives to help refocus its efforts.
After the hires were announced, Mr. Musk posted that “xAI wasn’t built the first time, so it’s being rebuilt from the ground up.”