Microsoft considered bid for Cursor before SpaceX secured landmark acquisition

SpaceX has officially announced its intent to acquire the AI coding startup Cursor for $60 billion, a move that follows earlier interest from Microsoft.

According to sources familiar with the matter, Microsoft recently evaluated a potential deal for the startup to bolster its standing in the competitive AI market but ultimately chose not to proceed with a bid.

The acquisition comes as Cursor, alongside OpenAI and Anthropic, continues to dominate the AI coding sector, often outperforming Microsoft’s own GitHub Copilot in market traction.

Elon Musk’s SpaceX shared the news on X on Tuesday, stating the deal is expected to close by the end of the year. If the transaction is not completed, SpaceX will pay Cursor a $10 billion termination fee.

"SpaceXAI and @cursor_ai are now working closely together to create the world's best coding and knowledge work AI," the company posted.

Michael Truell, the CEO of Cursor, also expressed his enthusiasm for X, noting he is "excited to partner with the SpaceX team to scale up Composer," his company’s signature AI model.

The deal reportedly caught prospective venture capital investors off guard, as many had recently lined up financing at a $50 billion valuation.

This strategic move follows the February merger of SpaceX and xAI, a combined entity now valued at $1.25 trillion.

While Microsoft’s Satya Nadella reported that GitHub Copilot reached 4.7 million subscribers in January, the company’s stock has underperformed this year.

Conversely, OpenAI’s Codex and Anthropic’s Claude Code continue to show rapid growth, with Anthropic reaching $30 billion in annualised revenue this month.