Microsoft CEO Satya Nadella speaks during the Microsoft AI Tour event in Munich, Germany on February 25, 2026.
Sven Hoppe Picture Alliance | getty images
Ahead of SpaceX’s announcement this week that it has acquired the rights to acquire Cursor for $60 billion, Microsoft A potential deal for the AI ​​coding startup is being considered, according to two people familiar with the matter.
Microsoft, which is trying to boost the popularity of its artificial intelligence tools to keep pace in the rapidly growing market of AI tools, decided not to move forward with a bid, one of the people said. Both sources asked for anonymity because the discussions were private.
While Microsoft has gained popularity among developers with GitHub Copilot, the AI ​​coding market is currently dominated by Anthropic and OpenAI as well as Cursor. Microsoft’s primary role in this area has been as an investor and cloud provider, having invested billions of dollars in Anthropic and OpenAI, which have committed to spending heavily on Microsoft Azure.
Microsoft declined to comment. A Cursor spokesperson did not respond to a request for comment.
CNBC reported earlier this month that venture capital firms had arranged financing for Cursor at a $50 billion valuation, underscoring growing demand for tools that can help users quickly assemble websites and applications.
SpaceX, controlled by Elon Musk, said in a post on Twitter on Tuesday that it had agreed to a deal to buy Cursor for $60 billion by the end of the year, or it would pay the company $10 billion.
“SpaceXAI and @cursor_ai are now working together to create the world’s best coding and knowledge work AI,” the company said in the post. Cursor CEO Michael Truel said on X that he is “excited to partner with the SpaceX team to enhance Composer,” referring to his company’s AI models.
One of the sources said the SpaceX deal came so late in Cursor’s fundraising process that potential investors were surprised by the deal. SpaceX had offered to perform cursor calculations in the weeks before this announcement.
Musk merged SpaceX with his AI startup XAI in a $1.25 trillion deal in February, and is in the process of taking the combined company public in what is likely to be a record IPO.
Meanwhile, Microsoft has seen its share price drop 10% this year, underperforming the broader market and its hyperscaler peers. CEO Satya Nadella told analysts in January that GitHub Copilot had 4.7 million paying customers, up 75% from a year earlier.
OpenAI is pushing its own codecs programming app. CEO Sam Altman said on x On Tuesday, it was reported that Codex has reached 4 million active users, less than two weeks after crossing the 3 million mark. Anthropic’s cloud code service has gained popularity this year, helping Anthropic reach $30 billion in annual revenue this month.
Watch: SpaceX signs Cursor deal ahead of IPO: Here’s what’s in it
