San Francisco, California - SpaceX shares surged again Tuesday, lifting Elon Musk's rocket company above Amazon into fifth place in market value as a record-breaking IPO gives way to a torrid buying frenzy.

Near 2:00 PM ET, shares of SpaceX, formally Space Exploration Technologies Corp., stood at $213.35, up 10.8%. That gives the company a market capitalization of around $2.8 trillion.

The latest rise came as SpaceX announced it will acquire artificial intelligence coding startup Cursor for $60 billion, a deal designed to further cement the Texas-based company near the nexus of the AI boom.

The SpaceX fever partly stems from enthusiasm over the company's growth potential, including AI. But at least as important are dynamics that have nothing to do with the company's operations or profit outlook.

Zendaya Did Tom Holland just confirm those Zendaya wedding rumors?

"There is no valuation support for this market cap as it's all retail excitement meeting a very small float and no institutional sellers," said Eric Clark, a portfolio manager and chief investment officer at Accuvest Global Advisors.

"It's just a momentum trade and retail excitement plus active growth managers wanting exposure," Clark said in an email that described SpaceX's growth potential as a "five-to-10-year game."

Shares of SpaceX have soared about 40% in three sessions since last week's IPO, which raised a record-breaking $85.7 billion.

"There's a bit of a mania involving AI and anything that could be one of the beneficiaries of the spending on AI," said Steve Sosnick of Interactive Brokers.

Co-founded by Musk in 2002, the rocket startup has since expanded into a major satellite operator and has also folded in Musk's artificial intelligence company – xAI – which includes the social media platform X (formerly Twitter).

SpaceX's acquisition of Cursor marks its latest big AI investment. Founded in 2022 and based in San Francisco, Cursor specializes in AI for software development, particularly for business uses.

An acquisition had looked possible after the two companies had announced a partnership in April that included a clause for Cursor to be potentially bought by SpaceX for $60 billion.

Cursor's emergence has coincided with the growth of "vibe coding," whereby online users build applications with AI-generated code.

Serena Williams Serena Williams to play doubles with sister Venus at Wimbledon

At its last funding round in November, Cursor was valued at $29 billion. Tuesday's deal more than doubles that sum.

In a filing with the Securities and Exchange Commission, SpaceX said the all-stock deal was expected to close in the third quarter of this year and that Cursor would become a wholly owned subsidiary.

In May, SpaceX announced plans to invest $55 billion to build a "Terafab" semiconductor factory in Texas, producing chips for artificial intelligence as well as robotics.

In early May, AI startup Anthropic announced a partnership with SpaceX under which it would pay for use of the compute capacity at SpaceX's Colossus 1 data center in Memphis, Tennessee.

These ventures have cemented investor belief that SpaceX resides at the nexus of key AI developments. Investor consensus also continues to propel Musk, already the world's wealthiest person, whose role as Tesla CEO also brings exposure to new developments in autonomous driving and robotics.

While SpaceX has won plenty of attention, the company's lofty ambitions for AI are expected to consume capital for at least the next few years. SpaceX reported a loss of $4.3 billion last year.

SpaceX's valuation puts it within striking range of Microsoft, which is currently worth $2.92 trillion, according to Yahoo Finance. Nvidia is first with nearly a $5.1 trillion valuation.

But portfolio manager Clark expects SpaceX's "bubbliscious" valuation to ebb once additional shares hit the market.

"The history of large IPOs is during the first year, and historically, there’s a big drawdown," Clark said. "That should happen when the float expands and people get a chance to match the fundamentals via the first quarterly report with the valuation and market cap."

Clark said SpaceX may one day justify such a valuation but "momentum, euphoria, and hype is a fickle beast, and this market is out of line across many stocks for now."