According to informed sources, Elon Musk's artificial intelligence company xAI is planning a new cooperative agreement with programming startup Cursor, enabling the latter to leverage its substantial computational resources.

Sources indicate that Cursor intends to train its latest AI programming model, Composer 2.5, on xAI's infrastructure. They also stated that Cursor will utilize tens of thousands of Graphics Processing Units from xAI.

This arrangement effectively positions xAI as a type of cloud service provider. By leasing a portion of its GPUs to other companies, xAI can begin generating revenue from its massive infrastructure while continuing to develop its own AI models. This setup helps the company offset the costs associated with building and operating data centers, while also strengthening ties with a startup that possesses valuable code data.

The three major cloud service providers—Amazon, Microsoft, and Google—possess millions of chips and earn substantial profits by renting out computing power to thousands of companies and developers. Emerging firms like CoreWeave and Lambda have built their businesses around providing GPUs specifically to AI model developers. Access to computing power has become an increasingly competitive aspect of the AI arms race.

This is not the first collaboration between Cursor and xAI. In March of this year, xAI hired two former Cursor product engineering leads, Andrew Milich and Jason Ginsburg. Previous reports indicated that Ginsburg and Milich lead the product team at xAI, reporting directly to Musk and xAI President Michael Nicolls.

xAI is one of many companies racing to build the best AI models, and its data center scale is among the largest. In December of last year, Musk stated during an all-hands meeting that xAI would outperform competitors like OpenAI and Anthropic because it possesses superior computing power for model training.

Over the past two years, xAI has rapidly expanded its data center capacity, naming the project "Colossus." Last year, the company reported owning approximately 200,000 Nvidia GPUs, and Musk has expressed plans to scale this up to one million GPUs.

Last month, reports emerged that Cursor was in talks to raise funding at a valuation of approximately $50 billion. Simultaneously, Cursor faces pressure as major AI startups like Anthropic and OpenAI aggressively move into the code assistant domain.

In March, Cursor released Composer 2, a code model designed to generate and edit code for large-scale projects.