According to the Wall Street Journal, Elon Musk has admitted that SpaceX is lagging behind OpenAI, Anthropic and even Google and Chinese open source models in the AI ​​race. Now he has $86 billion in capital reserves to change that, with his primary goal being to win over corporate customers. Musk hopes these customers will be willing to pay a premium for SpaceX's tools and computing power.


SpaceX listing brings a lot of money to Musk

SpaceX announced on Tuesday that it has acquired automated programming agent company Cursor in a $60 billion all-stock deal. The latter is a San Francisco startup whose products are used by major AI labs and companies such as Nvidia, British Airways and Deloitte.

In recent months, SpaceX has been reorganizing around increasing its AI capabilities. Earlier this year, the company acquired xAI, which is controlled by Musk, adding chatbot Grok, social platform X and large data centers to its portfolio. In April this year, SpaceX said it had received an option to acquire Cursor. One of the greatest values ​​it receives after announcing a formal acquisition is a stable and ongoing revenue stream.

Before completing the largest IPO in history, Musk once promoted his AI vision to investors: using AI to help humans move beyond the earth and "enable humans to understand the universe."

Musk emphasized on Tuesday that AI is expected to surpass any human being in programming and debugging code in the future. "AI will achieve Stockfish-level programming capabilities and general computer usage capabilities." He said when talking about the acquisition of Cursor. Stockfish is a popular chess engine capable of beating the best human players.

Compete for enterprise customers

SpaceX has recently begun leasing its data center capacity to competitors such as Anthropic and Google to generate revenue. In the context of the entire AI industry facing a shortage of computing power, this strategy is just right. According to the announced cooperation agreement, these computing power rental businesses are expected to bring in approximately US$26 billion in annual revenue from 2027 to 2029.


Musk

At the same time, SpaceX also plans to expand its workforce to meet Musk's AI ambitions. In April, SpaceX executives said at a pre-IPO meeting with investors that the company would expand xAI’s enterprise sales team, according to people familiar with the matter.

Cursor competes with Anthropic's Claude Code and OpenAI's Codex with a software development tool that helps companies speed up coding by allowing developers to switch between different AI models to automatically complete, edit and review lines of code.

The company is growing at an astonishing rate. Cursor's annualized sales (revenue over the next 12 months based on recent sales data) will grow from $100 million to $1 billion in 2025. By early June this year, that number had soared to $4 billion, people familiar with the matter said.

A person close to Cursor said that more than half of Cursor's revenue comes from enterprise customers, and the company also expects to continue to maintain cooperative relationships with other AI model providers in the future.

Recruit top talent

SpaceX’s acquisition price is more than double Cursor’s $29.3 billion valuation when it raised money last November.

In addition, SpaceX's acquisition may help fill xAI's leadership vacancy. Musk has previously said the company needs to "rebuild from the foundation." xAI laid off employees at the time, including founding team members.


Trull to fill leadership vacancy at xAI

Competition for top talent in the AI ​​field is extremely fierce, and Cursor CEO Michael Truell is regarded as a rising star in the AI ​​industry.

"We have a lot of things we can accomplish together. It's great to be able to work with SpaceX to build truly useful AI." Trull said on X.

backward situation

Last month, in a second civil lawsuit against OpenAI, Musk took the witness stand to rank the top AI models, making clear how much work xAI still has to do to catch up with its competitors.

"Anthropic is currently ranked first, OpenAI is ranked second, Google is probably ranked third, and China's open source model may be ranked fourth," he said, "and xAI is ranked fifth."

Although SpaceX dominates its core businesses such as rocket launches and satellite internet, xAI was still losing money and had few customers when it was acquired. The Wall Street Journal once reported that, as an important AI customer of xAI, there is controversy within the U.S. Department of Defense over the security and confidentiality of the company’s Grok chatbot.

This is a very serious problem given the huge investment required to train AI models, hire engineers and build computing infrastructure.

According to securities filings, xAI achieved revenue of $3.2 billion last year but lost $6.4 billion. The company's losses further expanded in the first quarter of this year, when it achieved revenue of $818 million but a loss of $2.5 billion.

However, SpaceX can only invest limited funds from its IPO financing into AI business. The company will need to use part of the proceeds to repay $20 billion in debt it owes under a bridge loan it obtained in March. SpaceX also announced billions of dollars in new projects, including spending at least $55 billion to build a chip manufacturing plant in Texas and plans to purchase spectrum resources for its Starlink Internet service.

Despite this, in Musk's view, the market opportunity in the AI ​​field is too great to miss.

SpaceX told investors before its IPO that its products and services were targeting a potential market of up to $28.5 trillion, calling it the largest market in "human history." Among them, the market size corresponding to AI products has reached 26.5 trillion US dollars, and enterprise-level applications account for the main part of AI products.

However, Morningstar analysts have questioned the way SpaceX calculates its addressable market and believe the company's intrinsic valuation is well below current trading levels.

Other institutions take a more optimistic view. Goldman Sachs and Morgan Stanley believe that SpaceX is expected to achieve significant growth with the help of AI. These two investment banks are also underwriters of the SpaceX IPO.

They all predict that SpaceX's revenue will be close to $160 billion by 2028, more than eight times the 2025 level.