What SpaceX’s Cursor Deal Says About xAI

Elon Musk’s marketing pitch for the SpaceX IPO just got a bit more complicated. SpaceX’s revelation Tuesday afternoon that it was working closely with Cursor, the once-dominant coding firm, and might buy it for $60 billion, raises new questions about the health of xAI, Musk’s AI startup that SpaceX acquired for $250 billion in stock in early February. What did SpaceX—and indirectly its shareholders—pay for?

The main reason Musk would consider buying Cursor is because his own startup can’t catch up to industry leaders in coding. Cursor, it’s no secret, grew very quickly in the coding business but lately has faced much tougher competition from Anthropic and OpenAI. Meanwhile, Musk recently shook up xAI, triggering mass departures, and stated a month ago that the AI startup hadn’t been “built right first time around” and had to be “rebuilt from the foundations up.”