Elon Musk's SpaceX is acquiring Anysphere, the startup behind the popular AI coding agent Cursor, for $60 billion in an all-stock deal to strengthen its presence in the lucrative enterprise AI tools market. Anysphere was co-founded by Pakistan-born Sualeh Asif.
Deal Details and Market Impact
Tuesday's deal follows SpaceX's blockbuster Nasdaq debut last week, which pushed its valuation beyond $2 trillion. The acquisition will give xAI, acquired by SpaceX in February, a stronger foothold in AI coding—one of the first areas where companies have turned AI into a significant revenue source from businesses.
Capitalizing on this interest is crucial for SpaceX, which pitched its IPO investors on an addressable market worth $28.5 trillion. A large share of that theoretical maximum revenue is expected to come from AI for businesses.
SpaceX announced on social media that it has exercised the option to acquire Cursor in an all-stock transaction with the goal of building the world's most useful AI models. For the past few months, SpaceXAI has been jointly training a model with Cursor, which will be released in Cursor and Grok Build soon.
Cursor's Role in AI Coding
Cursor is one of several Silicon Valley startups that have attracted waves of developers by using AI to automate coding, making it a key rival to market leaders Anthropic and OpenAI. However, a lack of access to computing power has hampered Cursor's growth.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said, “Cursor does not have the scale of OpenAI or Anthropic, but it has built some very impressive coding models relative to cost. That makes this a positive move for SpaceX.”
Background and Strategic Moves
SpaceX had been eyeing Cursor for months and, in April, unveiled an option to either buy the startup for $60 billion later this year or pay $10 billion for a partnership. In its IPO filing, the company noted that Cursor's access to developers' data, including coding requests and design decisions, could help improve its AI models, such as Grok.
SpaceX said on Tuesday it would soon release an AI model on Cursor as well as Grok Build, xAI's coding agent, which it has been jointly training for several months. The all-stock transaction, for which SpaceX will not use proceeds from its IPO, is expected to close in the third quarter of 2026.
Market Reaction and Valuation
SpaceX's shares jumped 10% in early trading, putting the company on track to add about $247 billion to its market capitalisation of $2.53 trillion. At $211.27, the stock has climbed more than 56% from its IPO price of $135. If the gains hold, SpaceX is set to overtake Amazon in market value to become the fifth-largest company.
Paying in stock lets SpaceX take advantage of its towering valuation, which would mean giving up a relatively small slice of equity for a $60 billion deal. Billionaire Bill Ackman said on X, “One of the things that makes SpaceX so valuable is how valuable it is. The Cursor acquisition costs materially less in dilution because of SpaceX's high valuation.”
Cursor's Growth and Backers
Cursor's business has scaled rapidly since its founding in 2022, with roughly $2.6 billion in annualised business-to-business revenue and enterprise sales growing sharply, according to company data shared with Reuters earlier this month.
The San Francisco-based company is backed by prominent Silicon Valley venture capitalists such as Andreessen Horowitz and Thrive, as well as Nvidia and Alphabet's Google. It had reportedly been in talks for a funding round valuing it at $50 billion.
Deal Terms and Conditions
SpaceX will pay a termination fee of $10 billion if Tuesday's deal collapses under specific circumstances. It will pay only $4 billion if the deal fails due to antitrust issues, according to the regulatory filing.
It was not immediately clear if the deal would affect SpaceX's agreements to rent out its data centres. The company has recently struck deals with Anthropic and Google to lease cloud computing capacity worth roughly $26 billion combined on an annual basis. Both deals include 90-day termination clauses, meaning SpaceX could quickly reclaim computing capacity if needed.
DS Davidson analyst Gil Luria said, “If usage of Grok and Cursor picks up enough, it can go back to using their capacity internally, but it appears that they will provide capacity to Anthropic and Google for the foreseeable future.”
