xAI + Cursor: compute deal, talent raid, and a $60B buyout option

xAI is renting tens of thousands of its chips to coding startup Cursor to train its next AI model — while simultaneously poaching the two engineers who scaled Cursor to $2B in annualized revenue with just 20 people.

Andrew Milich and Jason Ginsberg, who jointly ran Engineering and Product at Cursor, are now reporting directly to Musk. Their mandate: rebuild Grok's coding capabilities from scratch by mid-2026, after Musk declared the original wasn't "built right the first time."

But the deepest move may be structural: SpaceX has secured the right to acquire Cursor outright later this year at a valuation of $60 billion. Cursor is also raising a separate $2B round at a $50B+ pre-money valuation.

Why it matters: This isn't a partnership — it's a multi-front acquisition play combining talent extraction, compute dependency, and a buyout option.