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SpaceX has struck a deal with AI coding platform developer Cursor that will allow it to use xAI's Colossus supercomputer to "create the world’s best coding and knowledge work AI."
On X, SpaceX said, "the combination of Cursor’s leading product and distribution to expert software engineers with SpaceX’s million H100 equivalent Colossus training supercomputer will allow us to build the world’s most useful models."
As part of the deal, SpaceX will retain the option to purchase Cursor for $60 billion later this year. If it doesn't, it will owe Cursor $10 billion "for our work together."
All of this comes weeks before SpaceX's impending IPO, which could value the company as high as $1.75 trillion.
Although SpaceX has been primarily a rocket company for most of its existence, it has diversified in recent years. While development of the Starship launch vehicle continues apace, in 2026, SpaceX also supports 10 million+ Starlink customers. In February, it also absorbed Grok-developer xAI, making it the parent company of X and bringing most of SpaceX CEO Elon Musk's various ventures under a single banner ahead of the IPO.
The Cursor deal is just the latest step in boosting SpaceX's value ahead of its IPO, but it also solves a number of problems facing SpaceX, xAI, and Cursor. It means Cursor can train its own AI model(s) on xAI's massive dataset, and would no longer be dependent on OpenAI and Anthropic to enhance its coding toolsets.
In a Tuesday blog post, Cursor says it "released Composer less than six months ago as our first agentic coding model. After that, Composer 1.5 scaled reinforcement learning by over 20x. Composer 2 then added continued pretraining, reaching frontier-level performance at a fraction of the cost of other models. Each step up in compute has translated to meaningfully more capable models."
It acknowledged, however, that Cursor has "been bottlenecked by compute," so the SpaceX deal means "our team will leverage xAI's Colossus infrastructure to dramatically scale up the intelligence of our models."
This move also gives xAI its own coding tool to better compete with contemporary AI firms, and it adds even more narrative and actual value to SpaceX. Cursor's momentum can now fuel the continued expansion and growth of xAI and Grok, which has struggled to maintain relevance versus ChatGPT, Gemini, and other AI chatbots.
SpaceX also locks Cursor at a set value for its potential purchase, which, at the rate Cursor's valuation has grown, is a victory in itself. Cursor was valued at just $2.5 billion in January 2025, but that jumped to $29.3 billion by year's end, The Wall Street Journal reports. Last week, it was looking at a funding round that would push its estimated value to over $50 billion.
However, this also represents a strategic risk for SpaceX. Although Cursor and xAI may be able to develop a proprietary coding tool to compete with other major AI companies, doing so will take time. If it takes too long, or never quite catches up, SpaceX could be saddled with a company that peaked before it was purchased. That's on top of the debt it acquired with the mergers with xAI and its subsidiary, Twitter/X.
Fortunately for Musk and his fellow SpaceX shareholders, the IPO will probably come before the gamble needs to show its returns. But with Musk claiming xAI needs to be rebuilt from the ground up, how it is rebuilt may go a long way to deciding it and Cursor's long-term future.