Microsoft Explored Buying Cursor Before SpaceX Secured Potential $60 Billion Deal

Microsoft reportedly considered acquiring AI coding startup Cursor before Elon Musk’s SpaceX secured an agreement that could eventually lead to a $60 billion acquisition of the company, according to people familiar with the discussions.

The talks reveal how valuable AI-powered coding platforms have become as major technology companies race to strengthen their positions in the rapidly expanding artificial intelligence ecosystem. Cursor has emerged as one of the leading players in AI-assisted software development, competing against offerings from companies such as OpenAI and Anthropic.

According to sources familiar with the matter, Microsoft evaluated a possible acquisition but ultimately decided not to move forward with a formal bid. The company has been aggressively expanding its AI presence through products like GitHub Copilot, while also investing billions of dollars into AI firms including OpenAI and Anthropic.

Despite Microsoft’s strong position in developer tools, Cursor has gained significant momentum among programmers and startups looking for more advanced AI coding assistants capable of generating and organizing software projects rapidly.

The company had reportedly been in discussions with venture capital investors for a new funding round that would value the startup at around $50 billion. However, those talks were unexpectedly disrupted when SpaceX announced a surprise agreement earlier this week.

Under the arrangement, SpaceX has secured the right to acquire Cursor for $60 billion later this year or alternatively pay the company $10 billion tied to collaborative work between the two firms.

SpaceX described the partnership as part of a broader effort to build advanced AI systems focused on coding and knowledge work. Cursor CEO Michael Truell also confirmed the collaboration publicly, saying the partnership would help scale the company’s AI model known as Composer.

The move marks another major step in Elon Musk’s growing AI ambitions. Earlier this year, Musk merged SpaceX with his artificial intelligence company xAI in a deal reportedly valued at $1.25 trillion. The combined entity is also preparing for what could become one of the largest technology IPOs in history.

Industry analysts say the competition around AI coding tools is intensifying rapidly. OpenAI’s Codex platform continues to gain users, while Anthropic’s Claude Code has also seen strong adoption among developers. AI coding assistants are increasingly viewed as critical infrastructure for the future of software development, helping automate programming tasks and improve productivity.

Microsoft’s decision not to pursue Cursor may also reflect broader strategic considerations. While the company remains heavily invested in AI infrastructure and enterprise software, acquiring a fast-growing startup at such a massive valuation could have carried significant financial and competitive risks.

Still, the episode demonstrates how aggressively large technology firms and AI companies are moving to secure leadership in the next generation of AI-powered developer tools. As competition intensifies, AI coding platforms are quickly becoming one of the most strategically important sectors in the global artificial intelligence industry.