SpaceX's $60 Billion Purchase of Cursor Sparks OpenAI Split and Industry Upheaval

Cursor, an AI coding assistant developed at MIT, saw rapid growth in the AI software market. The startup gained industry attention for helping developers write code more efficiently and had reportedly surpassed $1 billion in annual recurring revenue, according to It's Possible.

In August 2026, SpaceX, led by Elon Musk, announced it was acquiring Cursor for $60 billion in an all-stock deal. Forbes reported that Cursor's MIT alumni founders were set to benefit significantly from the merger. SpaceX's goal was to boost its AI capabilities and reduce time spent on coding across its operations.

On August 17, 2026, SpaceX confirmed the $60 billion acquisition of Cursor, as covered by Tech Monitor. This marked one of the largest deals ever in the AI tools space. Shortly after, [Bloomberg Technology](https://www.bloomberg.com/news/videos/2026-08-19/spacex-attempted-to-buy-ai-coding-startup-cognition-video) reported on August 19 that SpaceX had approached another AI coding startup, Cognition, with an eye toward further expansion. However, the CEO of Cognition publicly denied that any acquisition talks had taken place, according to TechCrunch and The Next Web.

Inside SpaceX, Elon Musk addressed Cursor's 1,000 engineers in a company-wide call, expressing urgency to catch up with competitors like OpenAI and Anthropic, as detailed by Times of India. The integration of Cursor into SpaceX's technology stack became a top priority.

Just five days after the Cursor deal, OpenAI announced it would end its partnership with Cursor. On August 29, OpenAI stated that it would cut off Cursor's access to its AI models starting November 12, 2026. OpenAI cited concerns over SpaceX's contractual history and compliance with terms of service, with Business Insider and World News CNA highlighting the context of ongoing legal and personal disputes between Sam Altman and Elon Musk.

Developers using Cursor were given notice that they would lose access to OpenAI's models, a move that would affect a broad base of users, especially in Europe, according to The Next Web.

As of early September 2026, Cursor is now fully owned by SpaceX. OpenAI's decision to terminate model access is set to take effect on November 12, leaving Cursor and its users to seek alternatives. The split has deepened the public feud between Elon Musk and Sam Altman and created uncertainty for developers reliant on OpenAI-powered features in Cursor.

Cursor's management is reportedly seeking to negotiate or find new model providers, while rivals like Anthropic have begun offering alternatives to affected users, according to Digital Trends.

The immediate challenge is whether Cursor under SpaceX can secure new AI model partnerships or develop in-house solutions before the November cutoff. The broader question is how this high-profile split will shape future collaborations and rivalries in the AI and software industries.