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SpaceX said Tuesday it is partnering with Cursor, an AI coding startup.
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The contract gives Cursor access to SpaceX’s computing resources.
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Here’s what the smartest people in business and tech are saying about the multibillion-dollar deal.
SpaceX’s multibillion-dollar deal with AI coding startup Cursor is a big step for Elon Musk and his ambitions to win the AI race.
The space company, which owns AI startup xAi, is “working with Cursor to create the world’s best coding and knowledge work AI,” in an X post on Tuesday. It is expected to combine Cursor’s AI-powered coding model with SpaceX’s Colossus training supercomputer, the companies said.
As part of the deal, SpaceX gets the right to acquire Cursor later this year for $60 billion, or will pay Cursor $10 million for the work they produce together.
The companies have discussed a possible three-way partnership with Mistral in recent weeks, Business Insider reported.
The partnership could be an important step for Musk to get ahead of rivals like OpenAI and Anthropic.
Musk, who founded SpaceX in 2002, has made serious strides in AI this year. Chief among them is SpaceX’s acquisition of Musk’s xAI in February, which helped SpaceX expand into AI infrastructure and software. In April, SpaceX privately filed for an IPO, boosting gains in other space stocks and teasing a public debut this year.
News of the Cursor deal electrified conversations on social media among business and tech industry professionals, many of whom saw it as a symbiotic play. Here’s what tech people are saying about the deal.
Alex Finn, Creator Body and Founder of Henry Intelligent Machine
Alex Finn, founder of Creator Body and AI agent startup Henry Intelligent Machine, told the X Post the deal made “a lot of sense.”
“xAI has been behind in coding products for years now. Cursor has a great coding product, but they will fail unless they build their own model,” he said on Tuesday.
The deal could allow the two companies to address those issues, Finn said. When SpaceX acquires Cursor’s coding capabilities, Cursor gets access to SpaceX’s compute infrastructure to build its own models instead of relying on OpenAI’s ChatGPT or Anthropic’s Claude.
Finn said the hurdle Cursor faces is happening with many Vibe-coding tools that rely on OpenAI and Anthropic, which are building competing offerings.
“A win for both sides,” Finn said.
Hadley Harris, cofounder of Eniac Ventures
Hadley Harris, cofounder of seed-stage VC firm Eniac Ventures, told X that he didn’t “get” the deal.
“Every frontier dev I know has completely turned off Cursors and IDEs,” Harris said Wednesday, referring to “integrated development environments,” or applications that combine building, editing, testing, and other coding capabilities. “Only laggards are into it. And dev tools always lag behind thought leaders, never the other way around.”
Mario Nawfal, Founder of IBC Group
Mario Navafal, founder of startup incubator and accelerator IBC Group, said Cursor’s users are largely “elite software engineers,” an important group for SpaceX to cultivate ahead of its IPO.
Bringing on more software engineers will help SpaceX, and by extension, go further into AI infrastructure and development.
“@elonmusk now has space, satellites, AI, social media, and the world’s most popular coding tool under one roof,” Nauful said. “What he’s cooking is going to be wild.”
Tomasz Tunguz, Founder and General Partner at Theory Ventures
Tomasz Tunguz, general partner at early-stage VC firm Theory Ventures, said the partnership allows SpaceX and Cursor to fill their individual infrastructure gaps.
“Winning at agentic coding requires three layers: compute, model and deliver,” Tunguz told XPost on Wednesday. “Anthropic, OpenAI and Google own the full stack. xAI and Cursor each have a blank,”
He said xAI has massive compute power, referring to Musk’s Colossus data center in Memphis, but the company is losing popularity. Cursors, he said, have the opposite problem.
“Millions of developers code Vibe, but its model layer depends on OpenAI, Google, and Anthropic – all competitors. This relationship also puts pressure on margins,” Tunguz said. “For $10 billion, SpaceX buys a call option on a distribution it couldn’t maintain, and Cursor wins a freedom it hasn’t yet secured.”
Sarah Catanzaro, General Partner at Amplify
Amplify General Partner Sarah Catanzaro responded to the deal by referencing Elon Musk’s ambitious plan to put data centers in space. Amplify is a VC focused on early-stage tech startups.
“I think Elon realized to get data centers in the space, you need a really good coding agent first…” Cantanzaro said on X Post on Tuesday.
Anand Kannappan, former data scientist at Meta and co-founder of PatronusAI
Anand Kannappan, co-founder of AI startup Patronus, said on Tuesday that the deal was not a merger and acquisition as it was “a bet on what is a real disruption in frontier coding models.”
“The deal trains Cursor Composer on Colossus while xAI runs the same recipe on Grok,” its AI assistant, Kannappan, a former data scientist at Meta, told X. “Both sides, at the same time, find out whether the cursor’s data is actually a difference.”
He added: “The options structure reflects that uncertainty. If the training port ends, SpaceX buys Cursor and owns the pipeline. If it doesn’t, they pay $10B for use and walk-through.”
Regardless of the outcome, Kannappan said Musk’s companies will benefit.
“Either way, Grok ends up stronger than it would have been, and xAI gets an answer to a question it couldn’t answer internally,” he said.
Adit Seth, co-founder of The Narrative Company
On Wednesday, the co-founder of Narrative Company — a communications firm aimed at company executives — said SpaceX’s deal with Cursor puts the companies in direct competition with industry leaders such as OpenAI and Anthropic.
Adit Seth said the companies are claiming that Musk’s AI supercomputer can train cursor models that could replace Cloud and GPT. Both Anthropic and OpenAI are working to build their own integrated development environments, which help streamline software production.
“The cursor is the user. It’s not the model. Distribution without a secure model underneath is a rental,” Sheth said in an X post on Wednesday. “We’ll know in 6-12 months if that $60B buys the pit or rents it.”
Art Levy, Chief Business Officer at Brex
Art Levy, chief business officer at fintech company Brakes, told The X Post on Tuesday that he liked the deal.
“It’s ‘try before you buy’ for Elon, with a big ‘break up fee’ for Cursor if it doesn’t work,” Levy said.
He pointed out that the structure of the deal gives SpaceX a call option and prevents “startup destruction” if the deal goes through.
“I like it,” he said.
Max Kolisch, cofounder of Dover
Max Collis, co-founder of startup Dover Recruit, said Cursor’s decision to partner with SpaceX was likely an existential move.
He said at X that Cursor’s long-term viability was contingent on its access to Anthropic and OpenAI’s models.
“Both are actively building cursor competitors,” Kolish said. “It’s an existential platform risk for survival.”
Kolish also said that Cursor will need its “own fundamental models” — like Anthropic’s Cloud or Google’s Gemini. Those trainings require deep pockets.
“They found the guy with the deepest pockets in the world,” he said.
Rohit Mittal, Co-Founder and CEO of Helium Ventures
On Tuesday, Helium Ventures CEO and cofounder Rohit Mittal said the deal could shake up the AI startup scene. Helium Ventures acquires and mentors software businesses.
“It will be very interesting if cloud token consumption moves from cursor to xAI,” he told X.
Cursor currently relies on the cloud, its tokens – units of data processed by AI models – in its offerings. The new partnership could bring xAI into focus, Mittal said.
“I can imagine that will affect the growth rate of the cloud (not that it will slow down), but it will advance xAI much faster.”
“The hunger games have just begun,” he said.
Read the original article on Business Insider
