How is a VSCode fork and a open weight LLM fine-tune worth $60B?
One would think Elon would learn his lesson after overpaying for Twitter and then having to merge his failures together to stay afloat. But no, more cash into the burning pile.
Ignoring future business ideas, Cursor reported reached $2 billion+ annualized revenue run rate in 2026, doubling from 2025. Recent financing rounds reached high-end valuation between $30 billion and $50 billion.
If you give me a billion, I can do an annualized revenue run rate of ~$12 billion just by selling a dollar for 99 cents.
We're losing money on every unit, but we'll make up for it in volume.
because they already have VSCode or IntelliJ for edits
Codex is still going strong but it’s hard to imagine they won’t do similar eventually.
So now im honestly hearing a lot more folk stick it out with cursor while waiting for the dust to settle.
Cursor also has a very nice integrated DX that I miss in Claude's VSCode plugin.
Things are moving so fast, and these companies have no moat whatsoever. Purchasing a company for 30x annual revenue (and as others have pointed out, how much of this revenue goes straight to companies like Anthropic?), without knowing if it's even going to exist in 3-5 years, seems bonkers.
I mean, congratulations to the founders on becoming billionaires in record time, but this is uncharted territory.
1. It's cheap to run.
2. It has clear advantages over existing technology (SMS).
3. My mom uses it. She's never going to use cursor. Whatsapp had a huge userbase in Europe. Basically everyone I know uses it.
And it was "only" ~$20 billion. Inflation can't be this high.
The value in acquisitions for investors typically comes from how much money is locked into multi-year deals. A lot of tech folks in leadership positions that I talk to are very aware that the best option in this space changes every 2 months. Right now it's Claude. Next month it might be Codex. A couple months after that it could be Gemini/Qwen/Composor/Kimi/xAI.
Locking in with Cursor where quick swapping your team between the changing options is the point is a better choice than locking in even a 1 year deal with any single option where you're still going to be paying for token cost on top of it.
While I'm not sure about this buy, Cursor does at least have revenue. WhatsApp was basically running on VC/private money (they had an extremely nominal fee, but I never had to pay it), and was sold to buy its userbase into the Facebook fold. I don't think you can compare that to a business that at least has some decent revenue.
The cost of switching from cursor to codex or Claude code is minimal.
So what does Claude code actually have that spaceX can't imitate? Well, not much, but acquiring hot companies before your IPO is a good strategy to drive up your own valuation.
This deal is different: SpaceX is heading for an IPO which is now complicated by xAI becoming a subsidiary. Cursor is actually popular and I’m sure this is all stock-based so as long as investors believe that those users stick to xAI it’ll juice the entire SpaceX IPO. I am skeptical but these days the market seems to be driven by a country-club full of guys in Connecticut who are constantly hyperventilating on X so maybe from that angle it’s just another way he’s getting what he wanted from Twitter.
Biden won in 2020 with just ~$2 billion. Though he didn't get all the branches.
Neither did Obama, who won two terms for <$2 billion.
Are the house and courts really so expensive?
Tesla is the only major Elon business that’s independent of SpaceX at this point
Corporate contracts. A lot of companies have signed onto Cursor. xAI has a pretty toxic brand with Elon and the nonconsensual sexual images scandal. xAI has a ton of compute and few corporate customers. Now they have a ton.
> One would think Elon would learn his lesson after overpaying for Twitter
I think he took over Twitter to control what people using it see and promote right wing viewpoints. To that end it’s been a wild success.
For now, perhaps. I work with numerous companies who refuse to do business with his brands.
Cursor is installed on a LOT of computers.
Once Grok becomes the default engine, it will raise adoption.
More importantly, if you have Cursor installed all your data may be sent to their labs whether you use it or not (unfortunately - this is par for the course for all the LLMs, a la Microsoft).
That's worth a lot - especially considering that Cursor might also grow with the shift to more powerful local models and the fact that it has a respectable income stream.
Remember those stories of lottery winners who win millions then wind up broke AF, even homeless, in only a year or two because they have no impulse control and blew through it? Same people.
He bought Twitter to grab a megaphone to propagate his ego/agenda.
Grok was built for similar reasons.
He's buying Cursor to have a tool to push Grok on the world, and to have something of his own under his own ideological control to compete with SamA and Dario.
X AI is weak on coding and most of their founding researchers have departed for greener pastures. Musk has a great datacenter, but no researchers or data to use it with. This acquisition makes sense in that context.
See also ($, Stratechery) https://stratechery.com/2026/john-ternus-and-apples-hardware...
maybe he's getting value from this? (also the deal was essentially secured with Tesla stock, so who knows what did he actually pay)
The same way a rocket company that counts short-lived as satellites as an asset is worth 1.7 trillion. Congratulations to the Cursor folks, they are the only winners in this.
This is also part of the AI bubble delusion: agent assisted coding works, at least for some people, for some purposes. This deal perpetuates the illusion that AI will find high value use cases. The reality may be that software development has unique characteristics you won't find in law or medicine or other domains.
