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San Francisco (AFP)
SpaceX said on Tuesday it will acquire artificial intelligence coding startup Cursor for $60 billion as shares of Elon Musk's rocket company soared for a third straight session after a record-breaking IPO.
Near 1130 am (1530 GMT), shares of SpaceX, formally Space Exploration Technologies Corp., stood at $214.29, up 11.2 percent, and lifting its market value above Amazon to become the fifth largest enterprise in terms of market valuation.
Cursor, founded in 2022 and based in San Francisco, specializes in AI for creating software code, particularly for business uses.
An acquisition had looked possible after the two companies had announced a partnership in April that included a clause for Cursor to be potentially bought by SpaceX for $60 billion.
In a filing with the Securities and Exchange Commission, SpaceX said the all-stock deal was expected to close in the third quarter of this year and that Cursor would become a wholly owned subsidiary.
Combining Cursor's software and product expertise with SpaceX's "Colossus" AI training supercomputer will enable the company "to build the world's most useful models," the companies said in April when announcing their partnership.
Cursor had initially emerged as a platform where developers could interface with other AI models, such as Anthropic's Claude or Google's Gemini program.
In late October, Cursor's parent company Anysphere launched its own model, Composer, which has since been updated at a competitively priced level.
Cursor's emergence has coincided with the growth of "vibe coding," whereby online users ditch written codes and build applications by commands executed by AI.
The company has also been boosted by the growing capacity of AI "agents," which are able to undertake tasks of increasing sophistication well beyond responding to research queries.
Cursor described the latest version, Composer 2.5, as a "substantial improvement" over Composer 2.
"It is better at sustained work on long-running tasks, follows complex instructions more reliably, and is more pleasant to collaborate with," according to a May 18 blog post.
Growth at Cursor has been accelerated by increased business with the private sector, where there is a greater volume of work and profit margins are more robust compared with individual clients.
At its last funding round in November, Cursor was valued at $29 billion.
The company's acquisition by SpaceX further cements Musk's company as a dominant force in the emerging AI business.
SpaceX at AI nexus
Musk announced in February that SpaceX would acquire xAI, a step in his plan to launch solar-powered, satellite-based data centers to run future AI models.
In May, SpaceX announced plans to invest $55 billion to build a "Terafab" semiconductor factory in Texas, producing chips for artificial intelligence as well as robotics.
In early May, AI startup Anthropic announced a partnership with SpaceX under which it would pay for use of the compute capacity at SpaceX's Colossus 1 data center in Memphis, Tennessee.
These ventures have cemented investor belief that SpaceX resides at the nexus of key AI developments. Investor consensus also continues to propel Musk, already the world's wealthiest person, whose role as Tesla CEO also brings exposure to new developments in autonomous driving and robotics.
Shares of SpaceX have soared about 40 percent in three sessions since last week's IPO, which raised a record-breaking $85.7 billion.
With a market value of $2.76 trillion, SpaceX overtook Amazon in fifth place among companies and was within striking range of Microsoft, which is currently worth $2.92 trillion, according to Yahoo Finance.
