🧠 Food for thought

Implications, context, and why it matters.

Cursor grew fast through an expensive bet

• Until recently, Cursor had negative gross margins, so the product cost more to run than it brought in 1.
• The company leaned on outside AI model providers, including Anthropic, an AI startup that builds large language models. It has tried to cut that reliance as those providers moved into rival coding tools 1.
• Cursor reached slight gross-margin profitability on sales to large enterprise customers after it launched its in-house Composer model last November and shifted some usage to cheaper models such as Kimi from Moonshot AI 2.
• Accounts for individual developers still lose money, which underlines the harder math in that part of the business 2.

The deal ties AI growth more closely to computing power

• SpaceX disclosed a structure that gives it the right to buy Cursor for US$60 billion later in 2026, or make payments linked to a computing partnership 3.
• IPO filings say that if the acquisition does not happen, Cursor can receive a US$1.5 billion termination fee and a US$8.5 billion deferred services fee under the prospectus terms 3.
• The arrangement captures a wider strain for AI application companies that rely on foundation-model providers, the companies that supply the underlying AI models behind apps, while those same providers build nearby products that may compete with customers 1.
• It also adds to the view that large-scale computing access and infrastructure partnerships matter as much as cash for AI companies that want to train and run their own models 3.