Microsoft explored buying Cursor before SpaceX lined up a $60 billion deal

Microsoft considered purchasing AI startup Cursor but ultimately went in a different direction. Cursor has since reached a major agreement with SpaceX that would see SpaceX acquire the company.

SpaceX now holds the rights to purchase Cursor for $60 billion, though the deal also includes a separate option for SpaceX to instead pay $10 billion for a new partnership with the startup.

Cursor is one of several AI coding assistants used by developers. It competes with tools from Anthropic (Claude Code), OpenAI (OpenAI Codex), and Microsoft (GitHub Copilot).

SpaceX merged with xAI back in February. Both companies are controlled by Elon Musk. Now, the company will have a broader range of clients and users, regardless of if the deal leads to an acquisition or a partnership.

One of the main benefits for cursor is access to more compute. "We've wanted to push our training efforts much further, but we've been bottlenecked by compute," said Cursor in a blog post. "With this partnership, our team will leverage xAI's Colossus infrastructure to dramatically scale up the intelligence of our models."

SpaceX also announced the news on X earlier this week.

The news of SpaceX and Cursor's deal broke on Tuesday, April 21, 2026, but we have since learned about Microsoft's former interest in Cursor.

Despite looking into purchasing Cursor, Microsoft did not make an offer, according to CNBC. The outlet cited two sources, both of which chose to remain unnamed because discussions on the topic were private.

Microsoft did not comment on the acquisition of Cursor or regarding any discussions centered around Microsoft purchasing the startup. Cursor did not respond to CNBC when reached out to.

Cursor received a $50 billion valuation recently, as reported by CNBC. SpaceX coming to a $60 billion agreement demonstrates the ever-rising demand for AI.

Microsoft already has GitHub Copilot, so Cursor was more of a curiosity than a necessity. And with the company already pouring billions into AI, its leaders likely prefer to double down on what they’ve built rather than chase another expensive bet.

Join us on Reddit at r/WindowsCentral to share your insights and discuss our latest news, reviews, and more.