So SpaceX bought a $60B Option on Cursor, plus a bunch of services, for $10B.
If strike date comes and Cursor is in fact worth less than $60B... they can move to acquire it for that price. Or just let it "expire". And if it's worth more, they get a savage good deal. If the services were worth $8B anyway, it's hard to lose.
It seems less crazy to me through this lens. A straight acquisition, today, at $60B would in fact be crazy.
What's crazy is that a company that sells an IDE (that's not even a particularly good one compared to competitors like JetBrains) integrating some AI plugins could be worth more than $60B...
In terms of IDE yeah it is not that great.
I do have Copilot in VSCode and Cursor.
I thought both should be equal in solving problems - turns out Cursor with the same model selected somehow was able to solve tasks that Copilot would get stuck or run in loops.
They have some tricks on managing file access that others don’t.
Cynics on HN easily dismiss AI service wrappers (and many of them are in fact overblown and not worth their own code). But writing a genuinely good harness with lots of context engineering and solid tool integration is in fact not that easy. The biggest issue is that model providers also see what the community likes and often move on with their own offerings that are tailored to their own models, potentially at the training stage. So even if you have the best harness for something today, unless you are also a frontier LLM provider, there's zero guarantee you will still be relevant in the future. More like the opposite.
Sure, but is it worth 60 billion?
They are now a Codex clone and without the subscription pricing. You have to spend thousands to get what you get from a $200 Codex subscription. How do they compete with this except from users who haven't caught on yet, or businesses that are unbothered to spend thousands a month per dev and wouldn't consider just subscribing to 1-3 $200 subscriptions instead?
And their price is so high because it's markup on API rates. API rates, even without markup, are just insanely irresponsible for anyone to be spending on full-time daily usage.
> users who haven't caught on yet
They are catching up fast!
https://www.businessinsider.com/chamath-palihapitiya-ai-cost...
> users who haven't caught on yet
If you think this of users who use cursor then I don’t think you’ve used cursor much at all.
What do you mean?
Only the foundation model companies offer cheap/subsidized compute.
If you're an app layer company, you're offering a 10x worse deal to your customers.
Foundation model companies are willing to lose money to win loyalty. Remains to be seen if it'll work.
If you’re more worried about cost than you are being productive and getting good results then sure, stick with foundational model company apps.
“Being productive” without taking inputs/costs into consideration is an oxymoron.
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API rates are the real rates. Subscription costs are the "first hit is free" subsidized pricing.
* MicroSoft is shaking in the corner lol
MS is doing just fine I'm sure
Paying $10B for the option is also crazy though. Paying $10B for the thing outright and not just an option would be absurdly high.
Is this cash or compute? Elon has one of the world's biggest compute clusters spun up, and little inference demand to speak of.
Trading billions worth of idle compute, in exchange for a high-strike call option on the #3 player in the most-promising-vertical for AI, plus (presmuably) some access to their data, starts to sound like not a bad trade. Especially if you're pre-committed to betting your entire rocket company on winning in AI, and you're currently in sixth or seventh place.
If it's not in an 8K filing it isn't real.
I heard he made a deal with a company to use his clusters. Is there good data on demand for Grok? Seems like relatively little chatter at least, in spite of tremendous investment.
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Am I the outlier here who thinks such images should be allowed, because there is no real victim in ANY sense! Also, if the CSAM market is flooded with fake images, it might lead to less real CSAM images from being circulated, leading to FEWER victims. Just like how some conservators flooded the Chinese Rhino horn market with fake Rhino horns.
Has the availability of deepfake porn generation reduced the demand for deepfake porn featuring real people? When deepfake generators are capable of creating convincing imagery of flawless ideal fake humans, why do you suppose there’s so many real humans who report being non-consensual subjects of deepfake porn?
> Has the availability of deepfake porn generation reduced the demand for deepfake porn featuring real people?
yes
> When deepfake generators are capable of creating convincing imagery of flawless ideal fake humans, why do you suppose there’s so many real humans who report being non-consensual subjects of deepfake porn?
?
One obvious argument is what it was trained on.
Doesn't have to be. You can train it on normal pictures of children and nude images of adults.
Please stop spreading misinformation.
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I hate Trump as much as the next guy, but what is that evidence, again?
He had a very close, decades long friendship with the most notorious sex-trafficker-of-children-to-rich-creeps in modern history for decades. And when imprisoned, that infamous pedophile died while in a federal prison under Trump's control, with a strange gap in the CCTV video footage. And Trump's handling of the entire Epstein Files saga makes it clear that Trump is described extensively in those files and he desperately wants to conceal it. What could be in there that he would use the entire justice department to try and redact? Trump is shameless about things that are legal even if they're salacious (like sleeping with porn star Stormy Daniels), so you have to wonder, what could Jeffery Epstein's good friend be trying to conceal?
Also, he owned the Miss Universe org (including Miss USA and Miss Teen USA) for decades, and he was known to walk into the dressing rooms of teen contestants as young as 15 while they were undressed. [0]
Also, he bragged about molesting women, and a court of law found that he sexually assaulted E Jean Carroll.
I haven't proven the case that Trump had sex with a minor, but there's way more than enough probable cause to believe it's more likely than not.
[0] https://web.archive.org/web/20200111171647/https://www.rolli...
Obviously this looks very bad but you don't seriously think it constitutes evidence?
So you don’t have any evidence. Many of us hate trump. But at least we aren’t spreading conspiracy theories that haven’t amounted to nothing.
This isn't court. The evidence, such as it is, is all of the smoke which commonly motivates people to look for fire. The strongest and most comprehensive that I've seen is the argument that if Trump was not implicated in the Epstein files, he would be publishing them in free book form himself and forcing every media outlet to advertise it. Slight exaggeration, but I think truly only slight.
Not really relevant to the thread, but there are simple answers to the "eViDeNcE??" question. You may have already known this.
Again, circumstantial and speculative.
Clearly you don’t and that disingenuousness is frowned upon in discussions here.
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> you're pre-committed to betting your entire rocket company on winning in AI
SpaceX has invested a small amount as a share of its value in XAI, and could survive the loss of its investment.
Problem is basically, that if the option works out (Cursor truly has the talent to train a frontier model on SpaceX's infrastructure, and were simply lacking the infra before) the fair price would be way way more than $60B.
OpenAI tried to acquire Windsurf last year for $3B and couldn't.
Seems like Elon's move is two fold
1) A gamble based on cursor's compute constraint 2) if 1) plays out, he can purchase cursor via shares of spaceX over valued shares, at a fixed price should the valuation increase.
It reportedly has a $2B ARR, and a 5x multiplier doesn't seem insane to me, but who knows, honestly
But it's paying a 5x ARR multiplier for the right to buy at a 30x multiplier.
They have 2B ARR because their business model is about selling models cheaper than they cost.
The main frenzy with Cursor started when you could access Anthropic models practically for free.
Otherwise it is just VS Code.
> Otherwise it is just VS Code.
This is a bit simplistic. It's the VS Code that everyone used before cc came to town. Real devs, on real projects. All that data they collected is worth a lot more than "just vscode". Their composer2 is better than kimi2.5 and it's just a finetune on that data.
xAI had a decent model in grok4 (it was even sota on a bunch of benchmarks for a few weeks), but they didn't have great coding models (code-fast was ok-ish but nothing to write home about, certainly nowhere near SotA). Now that they've been banned from using claude, they'll get their expertise + data to build a coding model on top of whatever grok5 will be + their cluster for compute.
It doesn't sound like a bad plan to me, financial shenanigans or not.
What data? Their commercial terms promised they wouldn’t keep any for training.
There's a lengthy discussion to be had here, and there's enough lawyerspeak in every provider's data retention policy to wiggle out of anything. A few notes from their current data use page:
> If you enable “Privacy Mode” in Cursor’s settings: zero data retention will be enabled for our model providers. Cursor may store some code data to provide extra features. None of your code will ever be trained on by us or any third-party.
Note the "may store some code data" and "none of your code will ever be trained on". In general you never want to include actual customer code in training the data, because of leaks that you may not want. Say someone has a hash somewhere, and your model autocompletes that hash. Bad. But that's not to say you couldn't train a reward model on pairs of prompts + completions. You have "some code data" (which could be acceptance rate) and use that. You just need to store the acceptance rate. And later, when you train new models, you check against that reward model. Does my new model reply close enough to score higher? If so, you're going in the right direction.
> If you choose to turn off “Privacy Mode”: we may use and store codebase data, prompts, editor actions, code snippets, and other code data and actions to improve our AI features and train our models.
Self explainatory.
> Even if you use your API key, your requests will still go through our backend!
They are collecting data even if you BYOK.
> If you choose to index your codebase, Cursor will upload your codebase in small chunks to our server to compute embeddings, but all plaintext code for computing embeddings ceases to exist after the life of the request. The embeddings and metadata about your codebase (hashes, file names) may be stored in our database.
They don't store (nor need to store) plain text, but they may store embeddings and metadata. Again, you can use those to train other things, not necessarily models. You can use metadata to check if you're going in the right direction.
At 60B they might do it anyway and then pay 200M in fines when the court rules against them.
xAI needs a dev tool to compete with Codex and Claude Code.
Cursor needs their own 1st party backend model.
Sounds like a match made in heaven.
Not quite first party, but composer 2 is far superior to grok for coding. Unless you're eluding to them using SpaceX infra to train their own model vs. using grok
2B ARR at what cost base?
But they also get a whole bunch of AI Services from Cursor. Other comments have noted that xAI has fallen on bad times (idk one way or the other) so perhaps they were going to spend $5B on getting these services elsewhere, anyway.
SpaceX spending $1B a month on various AI services seems ~plausible
(EDIT - Or maybe it's an IP transfer, or maybe it's over a longer time horizon. Idk but SpaceX clearly expects value from 'our work together' even if they don't exercise.)
$1B per month on AI services does not seem remotely plausible to me... Engineers don't consume that many tokens...
And on the AI development side they're the ones providing compute in the form of a "million H100 equivalent Colossus training supercomputer"... On top of the cash.
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Cursor has no AI services, they do not develop their own frontier models. I see no reason to understand why $10bn for Cursor's services is an advantage xAI versus say a $10bn deal with Anthropic, OpenAI or Google.
It's true that Cursor doesn't have their own frontier models, but they are training their own models. They just aren't at frontier level yet. The $60B/$10B deal looks like a bet that this is a capital/GPU constraint rather than a capability one.
Those other companies wouldn't also toss in a purchase option.
But I agree that it's hard to articulate what Cursor services you could blow this much money on.
Maybe it is all just an option! Or maybe they get a bunch of IP either way?
Plausible how? Explain please.
Tokens. Tokens spawning sub agents using more tokens. Maybe some training too.
I didn't say it was Wise.
I said it seems within possibility for this, very particular, corporation.
Not only is it almost certainly compute (“services”) it’s likely priced at Anthropic rack-rate, or at least what Cursor’s been paying Anthropic.
The cluster’s already paid for, so likely in the $2B range for operating cash needs. Not more than $5.
If I imagine bringing in Cursor’s team to build a frontier model, ideally combined with Grok, which has one of the few truly proprietary data feeds available to it, and with a much larger custom model Cursor can solidify a place, and I get to do a stock swap to buy it, this sounds like a bet worth making.
Upshot - I bet there’s an MS/oAI deal on IP on the back of this; meanwhile the cluster goes brrr.
This valuation is absurd. Perhaps a year ago- sure, but there have been so many iterations of this “kind of editor” since then, not to mention countless alternatives.
So for me it’s more of a data deal - Elon buying himself some insight into codebases and real dev usage patterns? Oh finally someone to use his dirty data centres
Cursor is still the best I’ve used are there others I should try?
I've been using Kilo Code (VS Code Plugin) for the last few days, and it does most of what I liked in Cursor without tying me to their particular subscription.
That said, people are increasingly migrating to CLI tools (Claude Code if you like the Claude models, Pi Agent if you want something that's highly customizable, Crush if you want something fun), or GUI tools that are less code-first (Codex GUI).
People keep saying this and they don't understand how businesses work.
Cursor has 1B in enterprise revenue. It doesn't matter if people can clone their product, those deals don't move slowly
Put 1B into a better product and 10B into marketing. If you can’t beat their 1B in revenue, the market for making your money back on the Cursor acquisition also isn’t there.
What services could SpaceX possibly be buying from Cursor that would cost $8bn?
Despite their impressive ARR, Cursor faces existential threat from not only BigLabs (Claude Code, Open AI Codex) but also BigTech (AWS Kiro, Google Antigravity, MS VSCode). I am sure the usual suspects would have lined up to purchase Cursor, and the deal from xAI was probably the best of the lot. Marks an end to a remarkable sprint for a 3yo company, and an admirable exit (considering the recent discombobulation of Windsurf's), just as investor money and/or hype is going belly up.
Having tried most (all?) of the commercially available + open source options, and even tangential competitors like CC, Conductor, Antimetal, etc. I haven't found anything that's close to the experience of Cursor. The harness they've built is incredible.
I'd even go so far as to say that any competitors that are direct (windsurf, kiro, etc.) aren't even in the same universe. Cursor is just so much better, faster, has better features (plan and debug mode), and squeezes much better results/code out of the same models. They absolutely have some secrete sauce that the other options just don't have.
Cursor is my favorite of the VS forks. Agree that it delivers better plans than others. I prefer using Claude in Cursor over CC CLI when I am heads down going through bugs. I am disappointed in how "little value" in token use Cursor provides compared to others.
Do you have examples? I'm curious.
It has shown surprising stickiness. Occupying some middle ground between full adoption and still ~in the code.
I am starting to see some potential in moving back away from pure terminal, a mixed modality with AI. But it is not in the direction of IDE in any traditional sense.
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