Nathaniel Whittemore

Before that in the headlines, a big team up between SpaceX and Cursor.

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Have a grand old time.

And with that out of the way, let's get into the headlines.

SpaceX has signed a massive new deal with Cursor that adds a pretty meaningful twist to their rapidly approaching IPO.

On Tuesday, SpaceX announced in a post on X, of course, SpaceX AI and Cursor are now working closely together to create the world's best coding and knowledge work AI.

Now, it had previously been rumored that Cursor would be renting XAI servers for their next training run, but it now appears the collaboration is going much deeper.

SpaceX continued, "...the combination of Cursor's leading product and distribution to expert software engineers with SpaceX's Million H-100 equivalent Colossus training supercomputer will allow us to build the world's most useful model."

The Post also announced, and obviously this is the part that everyone focused on, that SpaceX had been granted the rights to acquire Cursor at a $60 billion valuation later this year, and if the acquisition doesn't go through, SpaceX will pay Cursor $10 billion for their collaborative work.

The deal potentially solves a number of problems for both companies.

By some reports, Cursor has been backed into a corner over the past six months.

Reports have suggested that they are making a loss on every Claude and OpenAI token they serve, so much of this year has been focused on developing a state-of-the-art in-house model.

And of course, beyond just the training runs, Cursor will need access to a ton of additional compute as they scale up revenue.

The company is reportedly in talks to raise $2 billion in venture funding, and even if that round does close, they are still massively resource-constrained compared to OpenAI and Anthropic.

Going back to the harness engineering episode from last week, the challenge for Cursor is in short that the biggies are not choosing model versus harness, they are doing both and.

So then here's the logic for why to team up with XAI.

The company has access to huge amounts of compute that at the moment aren't doing as much as they could.