· Max Tower · Business · 2 min read
SpaceX is buying Cursor
Two challenged players in AI combine forces
SpaceX-xAi has just announced their intent to purchase Cursor for $60B. Both companies are facing a challenging competitive environment and this alliance solves a big problem for each.
SpaceX-xAi has built one of the largest GPU data centers around, but because adoption of Grok has been limited there are a lot of GPUs going unused at Colossus. The entire technical founding team has left xAI, so it’s also not clear how much training will be spent on future Grok models.
Cursor on the other hand has been growing quickly and can probably make use of all the compute they can lay their hands on. When Cursor was just getting started, the AI model labs weren’t as focused on the programming use case. Now both Anthropic and OpenAi both compete directly with Cursor. This gives Cursor two reasons to search for an outside partner. First, they should increase focus on their own model Composer to add differentiation to the product. Second, reducing the risk of their model access from being throttled by OpenAi or Anthropic.
Will any of this matter?
While this deal does improve issues each company has, it’s hard to predcit positive outcomes. After the deal comes together, neither Cursor nor Grok will offer the strongest coding model. Since most of the AI experts have departed from xAi, the outlook for turning that around is dim. By owning their own compute, it would be interesting to see Cursor-xAi compete on costs. While Anthropic and OpenAi are beginning to shift their business away from subscriptions to token pricing, Cursor could offer a lower cost alternative that’s combined with a model that’s good enough.
