SpaceX closes $60 billion Cursor deal as AI revenue accelerates

SpaceX completed its $60 billion all-stock acquisition of AI coding startup Cursor on Aug. 14, issuing 389.3 million Class A shares and folding the developer-tools company into its AI unit as a wholly owned subsidiary.

"The implied valuation for SpaceX's AI business at the current price is, in our opinion, extremely conservative," Adam Jones, lead analyst at Morgan Stanley, wrote in a note this week, arguing investors are failing to appreciate the AI potential underpinning the firm's $300 price target.

The merger, first announced June 16, converts Cursor's outstanding common and preferred shares into 389,289,254 SpaceX Class A shares at a price equal to the volume-weighted average closing price over the seven trading days before closing. Vested Cursor restricted stock units converted into an additional 1,752,426 shares, while unvested RSUs and options were assumed as roughly 29.1 million SpaceX RSUs and 44.4 million stock options. The issuance was conducted as an unregistered offering under Section 4(a)(2) of the Securities Act.

The deal lands as SpaceX's AI ambitions accelerate sharply. Elon Musk told employees in an all-hands meeting this week that AI revenue "will exceed all other SpaceX revenue probably in September" and "significantly exceed" it in the fourth quarter. Morgan Stanley projects Cursor's annual revenue run rate will climb from $4 billion in June to $8 billion by year-end, $17 billion next year, and $33 billion by 2030.

The transaction marks the largest AI software acquisition of 2026 and the first major M&A since SpaceX's historic June IPO, which priced at $135 per share and made Musk the world's first trillionaire. The company rebranded as SpaceXAI after acquiring xAI and has since announced plans to launch data centers into orbit to train and run AI models, building exclusively with Nvidia's Vera Rubin architecture.

Cursor's run rate and the Grok integration

Morgan Stanley estimates investors currently value SpaceX's entire AI business at $12 per share, "well below even neocloud peers." The bank's analysts see the Cursor integration as a potential re-rating trigger as new Grok models incorporating Cursor data roll out and Cursor's revenue growth becomes visible in SpaceX's financial reporting. From Morgan Stanley's conversations with clients, "very few investors are bullish SpaceX's AI business beyond neocloud," the analysts wrote, referring to the data center leasing deals SpaceX has struck with Anthropic and Alphabet.

Enterprise AI adoption is accelerating across the broader market. The median monthly AI spend per employee grew 167 percent year-over-year to $11 in June, according to the Ramp AI Index, while the top 1 percent of companies spend nearly $5,000 per employee monthly. Nearly half of U.S. companies still spend nothing on AI products or services, per Ramp, and the Census Bureau puts that figure at 80 percent.

SpaceX shares fell nearly 5 percent on Tuesday after closing above the $135 IPO price on Monday for the first time since mid-July, a volatile stretch that has seen the stock swing between record lows and gains since its June listing. The stock pointed 1 percent higher in premarket trading Wednesday. Norway's $2.3 trillion sovereign wealth fund holds a roughly 12 percent stake in SpaceX, according to Reuters.

The Cursor deal's completion gives SpaceX a direct revenue stream from AI developer tools at a moment when the company is making AI its primary growth engine. Musk said SpaceX employees would be "the parents of the AI," with Grok trained on "the sum total of all SpaceX information." The company's other commercial offerings — Falcon 9 and Starship launch vehicles, Crew Dragon and Cargo Dragon spacecraft, and Starlink satellite internet — now face competition from AI as the company's top revenue contributor. Financial advisors on the transaction were not disclosed in the merger filing. The merger was executed through SpaceX's wholly owned subsidiary X67 Inc., which merged into Cursor at the Aug. 14 effective time.

This article is for informational purposes only and does not constitute investment advice.