The $60 Billion Bet on Artificial Intelligence
SpaceX exercised its option to acquire Cursor, an artificial intelligence coding assistant, for $60 billion in an all-stock transaction, the company announced Tuesday. The deal will close in the third quarter, making Cursor a wholly owned subsidiary of Elon Musk's space and satellite company. Cursor CEO Michael Truell said in a statement that the acquisition would help the companies "build the world's most useful AI models" and advance frontier AI capabilities.
SpaceX had alluded to the deal in April, when it first disclosed that Cursor had granted it approval to either buy the company for $60 billion or pay $10 billion to collaborate. The company said at that time it was working with Cursor to create the "world's best coding and knowledge work AI." Cursor, developed by San Francisco-based startup Anysphere and launched in 2022 by Michael Truell and three MIT classmates, bills itself as a "coding agent for building ambitious software."
Timing and Market Momentum
The acquisition comes just days after SpaceX completed the largest initial public offering in history, raising $75 billion to fund its expansion. SpaceX shares climbed more than 45 percent from their $150 opening price on Friday to more than $220 by Tuesday, pushing the company's market value to $2.94 trillion. That gain of nearly $1 trillion in value since the IPO debut at $1.77 trillion has made SpaceX the world's fourth-largest publicly traded company, surpassing both Amazon and Microsoft.
On Tuesday alone, SpaceX shares gained another 15 percent in early trading as retail investor interest showed no sign of slowing. Researchers at Vanda noted that retail investors had purchased almost as much SpaceX stock over two days as they bought across the entire U.S. stock market the previous week. Leveraged bets on SpaceX generated more than $1 billion of trading volume on their first day, underscoring the extraordinary appetite surrounding Musk's newest public company.
Competing in the AI Race
The Cursor acquisition positions SpaceX to compete with established AI leaders in coding tools. Anthropic, OpenAI, Google, and Meta currently dominate the frontier AI market for coding applications. Both Anthropic and OpenAI are expected to go public sometime this year.
Vital Knowledge analyst Adam Crisafulli said SpaceX hopes the Cursor team and product will strengthen its Grok AI business, which has so far failed to make a dent in the frontier market. SpaceX said in a social media post Tuesday that it has been jointly training an AI model with Cursor and will release it soon. When Cursor first announced the potential deal, it noted that teaming with SpaceX subsidiary xAI would enable it to build future software products using xAI's AI data center complex in Memphis, Tennessee.
Investor Caution Amid Euphoria
Not all investors are uncritically embracing SpaceX's valuation. Forde Todd, a 20-year-old retail investor who received three shares through the IPO and bought several more, said he was up around $600 on his position but expressed reservations about the company's fundamentals. "My caution is that this is a company that has raised very little, that has made very little earnings, is currently worth more than companies that have existed for the past 20 years and have billions of dollars' worth of revenue," Todd told NBC News.
The SpaceX surge has come at the expense of other space-related stocks. Virgin Galactic, EchoStar, and AST SpaceMobile all fell sharply after SpaceX's debut as investors rotated their holdings into the newly public company.
