Hey, this is a known issue. The extension host can become unresponsive and cause a timeout. The team is aware and tracking it.
A few things to try:
Switch to stable. You’re on a pre-release build 2.7.0-pre.87.patch.0, which can be less stable. Go to Cursor Settings and switch the release track to Default/Stable, then restart.
Disable extensions. Run cursor --disable-extensions in the terminal to check if an extension is causing the hang.
Reload Window. Press Cmd+Shift+P, then run Reload Window when it happens.
The pre-release build is the most likely cause here. Switching to stable should help.