Microsoft $MSFT looked at acquiring AI coding startup Cursor before SpaceX announced rights to buy the company for $60 billion, according to CNBC. Microsoft ultimately decided against making a formal bid.
Under the terms SpaceX announced Tuesday, the company holds the right to purchase Cursor outright for $60 billion before the end of the year; if it does not exercise that option, it will instead pay Cursor $10 billion for the work the two companies are doing together. Prospective investors were left blindsided when the SpaceX arrangement materialized, according to CNBC, because it emerged only at the tail end of Cursor's fundraising process. Before the deal was made public, SpaceX had extended an offer of compute resources to Cursor.
GitHub Copilot has been Microsoft's main vehicle in the AI coding race; Nadella told analysts earlier this year that the tool had reached 4.7 million paying subscribers, a 75% year-over-year increase. Even so, Cursor has emerged as the dominant force in that market, with Anthropic and OpenAI also outpacing Microsoft, according to CNBC.
Microsoft was not the only major player to pursue Cursor. Tipranks also reported that Cursor rebuffed two separate overtures from OpenAI, as the startup's leadership had prioritized staying independent — a posture supported by revenue that has reportedly been doubling at roughly a two-month clip.
At the time the SpaceX deal emerged, Cursor was actively pursuing a $2 billion fundraise that would have valued the company at more than $50 billion, with Andreessen Horowitz, Nvidia $NVDA, and Thrive Capital set to participate. The $60 billion price tag SpaceX negotiated exceeds that figure. A $2.3 billion Series D round closed in November had put Cursor's post-money valuation at $29.3 billion — itself a sharp rise from $2.5 billion at the start of 2025.
Earlier this year, in a transaction carrying a $1.25 trillion valuation, SpaceX folded xAI — Musk's AI venture — into its operations. The combined company is in the process of going public. The Tuesday X $TWTR post in which SpaceX disclosed the arrangement described an ambition to develop "the world's best coding and knowledge work AI." On X, Truell described his reaction to the deal, writing that he is "excited to partner with the SpaceX team to scale up Composer" — a reference to the AI model Cursor has developed.
CNBC noted that it received no comment from Microsoft or Cursor when it sought responses from both companies.