SpaceX Goes on $60 Billion AI Buying Spree
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What acquisition is SpaceX making and why is it significant?
SpaceX is making another big acquisition, this time buying Cursor. Does that make sense long-term? Motley Fool Money starts now.
Welcome to Motley Fool Money. I'm Travis Hoey. I'm joined today by Lou Whiteman and Rachel Warren. Guys, we got to start with what I think might be one of the biggest news items of the week, despite the fact that we're in the middle of earnings season. SpaceX has made a deal to potentially buy Cursor. It's all a little bit confusing. They're either going to buy Cursor for $60 billion at some point in the future, or they're going to write him a $10 billion check for whatever they're doing together. Lou, this is another acquisition that SpaceX is making in the AI space.
How does SpaceX's acquisition of Cursor impact its AI strategy?
Obviously, XAI, which includes X, formerly known as Twitter, and the AI efforts were acquired earlier this year, or maybe it was last year, but in the last year. This is another move in that direction, but it seems to be just a lot of spaghetti at the wall for a company that used to be so focused on space and now looking at a potentially $2 trillion IPO. I don't know what this company is becoming at this point.
I'm not sure it does, either. But I can clear something up for me, I think, from my investment banking days. What's going on to reason the weird $10 billion, $60 billion? It is really, really awkward to do an acquisition right before an IPO. You have to refile all your paperwork, kind of go from scratch. It's going to delay things. They can't do the deal right now. It's basically a, I promise to buy you after the IPO. Think of the $10 billion as a massive breakup fee, where you get something out of this either way, but that's why it's this convoluted weird thing. Yes, they want to buy it. I think what's going on with the strategy is, X is clearly behind Claude and the other models. They're trying to catch up, they're trying to add to their firepower.
Cursor likely helps XAI, but it also does add to the burden. One of the reasons Cursor was trying to find fundraising or do a deal is they need money for their own compute.
What challenges does SpaceX face with its AI ambitions?
They were kind of yesterday's news, too. I think this is both, you know, I think it all sort of makes sense, but at the same time, it is just a bunch of companies that maybe aren't front of mind in the XI race trying to join together to become front of mind again or to build something from here.
Yeah, Rachel, the odd thing is these may not be the leaders, either of these companies, but this is going to probably be one of the most valuable companies in the world. It's sort of a strange place to be.
Yeah, I mean, I think we're seeing a paradigm where SpaceX is trying to convince investors that it deserves that evaluation that's rumored to be up to $2 trillion when it goes public, very likely in June. But I think this is part of this core strategy to transform SpaceX from a simple rocket company into this massive tech engine that can really connect space hardware with AI. And we've kind of seen this playing out, merging with XAI, obviously securing this major deal with Cursor. I think that they're trying to position themselves to solve what is still really the biggest problem facing AI today, which is really the massive amount of electricity and land needed for data centers. We know that the long-term vision for Musk is to use Starship to launch giant orbital data centers that run on constant solar power, use the cold of space for cooling.
That would move the heavy lifting of AI computing off the Earth's power grid and into orbit. This partnership with Cursor could act as a test run for that vision. They're paying for the keys to one of the most advanced suites of AI coding tools that could really speed up their own engineering on various projects, including their mission to Mars. I think there's both a bull and a bear side here. On the bull side, SpaceX is building a space-based monopoly that no one else can touch. That's the idea here. They're looking to combine the world's most powerful rockets with advanced AI. But there's also the bear case, right?
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Chapters
8 chapters
1
What acquisition is SpaceX making and why is it significant?
0:05–0:51
2
How does SpaceX's acquisition of Cursor impact its AI strategy?
0:51–2:12
3
What challenges does SpaceX face with its AI ambitions?
2:12–4:14
4
How is Amazon entering the GLP-1 market and what does it mean for healthcare?
4:14–5:05
5
What logistics advantages does Amazon have in the pharmaceutical space?
5:05–6:41
6
How is Meta using AI to track employee performance?
6:41–7:27
7
What ethical concerns arise from Meta's AI tracking of employees?
7:27–7:56
8
What future implications does AI tracking have for the workplace?
7:56–17:44