SpaceX has agreed to acquire AI coding startup Cursor for $60 billion in stock, just days after its historic initial public offering. The deal is designed to bolster SpaceX’s struggling AI division, which was formed through the merger with Elon Musk’s AI company xAI earlier this year.

Cursor was on track to close a $2 billion funding round from prominent investors including Andreessen Horowitz and Nvidia at a $50 billion valuation before SpaceX entered the picture. However, the acquisition structure effectively locked in Cursor as a strategic priority for Musk’s space company, with SpaceX owing a $10 billion break-up fee if the deal fell through.

The acquisition is widely seen as an attempt to inject fresh talent and technology into SpaceX’s AI unit, which has faced significant headwinds since its formation. The division has been in the midst of a restructuring after running into repeated controversies, including allowing users to generate non-consensual deep fakes of women and children.

By acquiring Cursor, SpaceX gains access to proven AI-powered coding tools that have rapidly gained traction among software developers. These tools enable developers to generate, review, and debug code using natural language prompts, posing a direct challenge to GitHub Copilot and other AI coding assistants.

The deal also gives SpaceX a foothold in the enterprise software market, diversifying its revenue streams beyond space launches and satellite internet services. However, whether the acquisition can help SpaceX overcome its internal controversies and compete with leading AI labs remains an open question.

SpaceX has said the acquisition is likely to close in the third quarter of this year, subject to regulatory approvals and customary closing conditions. The deal’s success will depend on how effectively Cursor’s technology and team integrate into SpaceX’s existing operations and whether they can help accelerate the company’s AI ambitions.