OpenAI cut off Cursor's access to its AI models after SpaceX completed its $60 billion acquisition of the coding platform, naming Elon Musk directly as the reason. The move pushes SpaceX further into building its own AI compute and software stack, with analysts setting an average price target near $219 on the company.
OpenAI cut off model access for Cursor on Friday, right after SpaceX closed its $60 billion acquisition of the coding platform. The decision turns the long-running rivalry between OpenAI CEO Sam Altman and Musk from public sparring into an operational dispute over AI infrastructure.
OpenAI names Musk directly
OpenAI attributed the cutoff to Musk's conduct rather than to Cursor itself. According to 24/7 Wall St.: "we cannot be confident that SpaceX will use our technology within our terms of service", citing prior contract violations by Musk's companies. Yet SpaceX says OpenAI served only about 5% of Cursor's user traffic, and the company is working with OpenAI to resolve the dispute.
Cursor can still route developers to their own OpenAI API keys or other providers for now, and Anthropic has already signaled increased Claude support. However, future OpenAI models, including the forthcoming Astra, stay off the table for Cursor.
Compute buildout backs the split
The dispute centers on SpaceX's Colossus clusters, which target the equivalent of 1 million Nvidia H100 chips. Cursor had flagged that scale of dedicated compute as necessary to train competitive models of its own before the acquisition closed.
By owning both the compute layer and Cursor's application layer, SpaceX follows the same vertical-integration approach it used to cut launch costs from roughly $10,000 per kilogram toward $100. Cursor brought roughly $4 billion in annualized revenue into the deal at a 15-times multiple, and folding that revenue into Colossus removes SpaceX's reliance on rival AI labs.
What it means for SpaceX shares
SpaceX closed at $141.50 on Friday, giving it a market capitalization of about $1.92 trillion, up from $1.77 trillion at its June 12 IPO. The $60 billion Cursor deal represented roughly 2% to 3% dilution depending on the exact share-price timing.
Analysts tracking the stock put an average price target near $219, implying more than 50% upside from recent levels. Some models forecast revenue growth exceeding 100% over three years. The original April partnership terms between OpenAI and Cursor had included a $10 billion alternative fee, evidence both sides had already priced the compute relationship as valuable.
Integration risks remain: Cursor users may see friction during the transition, and execution on proprietary Grok-powered coding models is not guaranteed. Still, the cutoff pushes SpaceX further toward a coding stack it fully controls.
Source: 24/7 Wall St.
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