Devoured - April 27, 2026
Cursor's $60 Billion Escape Hatch (5 minute read)

Cursor's $60 Billion Escape Hatch (5 minute read)

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SpaceX secured a $60 billion option to acquire AI coding tool Cursor, whose power users have driven gross margins to negative 23% due to expensive API fees from Anthropic and OpenAI.

What: Cursor, an AI coding assistant generating $2.7 billion in annualized revenue, signed a deal giving SpaceX the option to acquire it for $60 billion or pay $10 billion for their collaboration work, with the primary benefit being access to SpaceX's Colossus supercomputer to reduce reliance on third-party AI model providers.
Why it matters: The deal illustrates how AI coding tools have inverted traditional SaaS economics—power users who generate the most value also consume the most compute, making them unprofitable to serve at current pricing, and shows how infrastructure access has become as strategic as the AI models themselves.
Deep dive
  • Cursor attempted to raise billions at a $50 billion valuation but late-stage investors like Iconiq declined, having already deployed capital into OpenAI and Anthropic and unwilling to back what they viewed as a competitor
  • The company had lined up $2 billion from Nvidia, Andreessen Horowitz, and Thrive Capital before canceling the round after the SpaceX deal was announced
  • Cursor lost nearly $900 million in its last fiscal year despite strong revenue growth, highlighting the unsustainable unit economics of AI-powered developer tools at scale
  • SpaceX's financial picture is increasingly complex ahead of its June IPO, with a $20 billion bridge loan to refinance debt tied to X and xAI, down from $22 billion total
  • xAI alone spent $12.7 billion in capital expenditures last year while generating only $3.2 billion in revenue, suggesting massive infrastructure buildout costs
  • The deal may indicate SpaceX is using IPO momentum to absorb cash-hungry AI businesses before public investors scrutinize the full financials in the S-1 filing
  • Anthropic ran a holdback test withholding Claude Code from 2% of new Pro subscriber signups to measure feature value, drawing criticism despite being standard AB testing practice
  • OpenAI initially restricted GPT-5.4-Cyber variant to verified partners via its Trusted Access for Cyber program, citing cybersecurity concerns about releasing the model broadly
  • Nine days later, OpenAI reversed course and released GPT-5.5 to all users via chatbot, then added API access just one day after that, raising questions about whether safety concerns are genuine or commercially motivated
  • GitHub paused new Copilot paid plan signups after agentic workflows consumed more compute than monthly subscription fees could cover, with some requests costing more than the entire plan price
  • Amazon committed up to $25 billion in additional Anthropic funding at a $380 billion valuation, with Anthropic pledging over $100 billion in AWS spending over 10 years on custom silicon
  • xAI held talks with French AI lab Mistral and Cursor about a three-way partnership to compete with Anthropic and OpenAI, with former Mistral cofounder Devendra Chaplot already running pretraining at xAI
  • Meta deployed "Model Capability Initiative" surveillance software on US employees' work laptops to capture mouse movements, keystrokes, and periodic screenshots as training data for computer-use agents, with no opt-out available despite internal backlash
Decoder
  • Gross margins: Revenue minus cost of goods sold, expressed as a percentage; negative margins mean it costs more to deliver the service than customers pay
  • Annualized revenue: Monthly or quarterly revenue multiplied to estimate what full-year revenue would be at the current run rate
  • Colossus: SpaceX's supercomputer cluster, presumably built for AI training and inference workloads
  • Holdback test: An A/B testing methodology where a feature is withheld from a small percentage of users to measure its value by comparing behavior between groups
  • Agentic workflows: AI systems that can autonomously execute multi-step tasks rather than just responding to single prompts
  • ICHRA: Individual Coverage Health Reimbursement Arrangement, a type of employer health benefit where companies reimburse employees for individual health insurance premiums
Original article

Cursor's $60 Billion Escape Hatch

SpaceX Secures Option to Acquire Cursor

SpaceX announced this week that it has secured an option to acquire AI coding startup Cursor for $60 billion, or pay $10 billion for the work they're doing together if it doesn't end up acquiring the company. The agreement gives Cursor access to SpaceX's Colossus supercomputer and a path to reducing its dependence on Anthropic and OpenAI, whose models currently power much of Cursor's product and whose fees have weighed heavily on its margins.

The timing of the SpaceX deal is interesting. Just a few weeks earlier, Cursor had been quietly attempting to raise billions in private markets, but had encountered a lack of interest from late-stage investors like Iconiq, many of whom had just deployed capital into OpenAI and Anthropic and weren't ready to back a competitor at a $50 billion valuation. Cursor's gross margins were negative 23% as of January, an unusual position for a company generating $2.7 billion in annualized revenue. The company ultimately lined up $2 billion from Nvidia, a16z, and Thrive before canceling the round following after the deal with SpaceX was announced.

The Cursor deal complicates an already complicated financial picture for SpaceX ahead of its June IPO. Reuters reported this week that SpaceX took out a $20 billion bridge loan last month to refinance debt tied to X and xAI, reducing total debt from $22 billion to $20 billion, with repayment potentially contingent on IPO proceeds. xAI spent $12.7 billion in capital expenditures last year while generating only $3.2 billion in revenue. Cursor lost nearly $900 million in its last fiscal year. This may indicate that SpaceX is using its IPO momentum to paper over a collection of cash-hungry businesses before public market investors get a full look at the S-1.

Anthropic's Holdback Test Draws Criticism

A tweet claiming that Anthropic was no longer offering Claude Code access to Pro subscribers paying $20 per month made the rounds on social media this week. This was seen as an indication that the company would need to take drastic measures to maintain service for customers amidst an ongoing compute shortage. Anthropic has not said how many Claude Code users it has currently, or how many of those users are Pro or Max subscribers.

As it turns out, the situation was overstated. Anthropic's head of growth, Amol Avasare, responded directly to the post, saying that "we're running a small test on ~2% of new prosumer signups. Existing Pro and Max subscribers aren't affected." In AB testing, this is called a "holdback test," in which the value of a feature is measured by excluding a small subset of users from accessing it. Nevertheless, many questioned the wisdom of running a test like this on a tool as widely used as Claude, and competitors were quick to pile on. OpenAI directly implied it was a violation of customer trust, and Sam Altman mockingly replied "ok boomer" to Amol's post.

OpenAI's Changing Tune

On April 14, just one week after Anthropic said Mythos was too powerful to release publicly because of cybersecurity concerns, OpenAI published a blog post announcing that its newest model would not be released broadly to the public and would instead be accessible only to verified partners via a tiered cybersecurity access program introduced in February called Trusted Access for Cyber (TAC). This specifically pertained to a variant of GPT-5.4, with OpenAI saying "we are fine-tuning our models specifically to enable defensive cybersecurity use cases, starting today with a variant of GPT‑5.4 trained to be cyber-permissive: GPT‑5.4‑Cyber."

Then, on April 23rd, OpenAI announced that its newest model, GPT-5.5, would in fact be available to all users, though only via chatbot, not API. The press release said this was because "API deployments require different safeguards," but also that "We'll bring GPT‑5.5 and GPT‑5.5 Pro to the API very soon". On April 24th, the company seemingly changed their mind or implemented the safeguards very fast, and GPT-5.5 became available via API that afternoon. The company's evolving stance has fueled skepticism about the actual risks of the models and supported the view that current limits are motivated by the business model, not safety concerns.

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What We're Reading

  • Anthropic is investigating how unauthorized users gained access to Anthropic's restricted Mythos cybersecurity model by combining a third-party contractor's credentials with data from a breach at AI startup Mercor Inc. to locate the model's endpoint.
  • xAI held talks in recent weeks with French lab Mistral and AI coding firm Cursor about a three-way partnership to close the gap on Anthropic and OpenAI, on top of SpaceX's newly disclosed $60 billion call option to acquire Cursor, with ex-Mistral cofounder Devendra Chaplot already running pretraining at xAI.
  • Apple announced that Tim Cook will step up to executive chairman and SVP of Hardware Engineering John Ternus will take over as CEO effective September 1, 2026, concluding Cook's 15-year tenure during which Apple's market cap grew from ~$350 billion to $4 trillion.
  • Blue Origin successfully recovered the New Glenn first stage rocket in its second flight last week, but the rocket's payload, an AST SpaceMobile communications satellite, ended up in an "off-nominal orbit," temporarily grounding New Glenn.
  • Tesla expanded its Robotaxi service to Dallas and Houston, but Robotaxi Tracker data suggests "there may be just one vehicle operating in each city so far," with tiny geofences relative to each city's footprint.
  • GitHub paused new sign-ups for paid Copilot plans and tightened usage limits after agentic workflows consumed more compute than monthly fees cover, with VP of product Joe Binder writing, "It's now common for a handful of requests to incur costs that exceed the plan price."
  • Amazon committed up to $25 billion in additional funding to Anthropic ($5B immediately, $20B tied to "certain commercial milestones") at Anthropic's $380B valuation, with Anthropic pledging $100B+ on AWS over 10 years, CEO Andy Jassy said the commitment "reflects the progress we've made together on custom silicon."
  • Meta Superintelligence Labs rolled out its "Model Capability Initiative" on Meta US employees' work laptops to capture mouse movements, keystrokes, and periodic screenshots as training data for computer-use agents. Despite internal backlash, the company has clarified that there is no option to opt out of the initiative.
  • Commerce Secretary Howard Lutnick told a Senate hearing that despite Trump lifting the H200 export ban four months earlier, no H200 chips have been sold to Chinese firms, saying "The Chinese central government has not let them, as of yet, buy the chips."
  • Trump issued an executive order directing the FDA to prioritize clinical trials and "Right to Try" access for psilocybin, MDMA, and ibogaine, and allocated $50 million in HHS matching funds for state research programs, triggering rallies in psychedelic drug-developer stocks.
  • The Trump administration is nearing a deal to lend Spirit Airlines up to $500 million in exchange for warrants giving the US government a potential 90% equity stake post-bankruptcy, sparking pushback from Transportation Secretary Sean Duffy, who asked, "If you do Spirit, who comes next?"
  • About 30K Samsung workers rallied at the Pyeongtaek chip complex in South Korea, demanding 15% of operating profit be paid out to chip-division employees. This would amount to more than 40 trillion won (~$27 billion), averaging $400K+ per worker, with the union threatening an 18-day strike starting May 21, following Samsung's record Q1 operating profit forecast of 57.2 trillion won.