But what's the $60B differentiator here? There are so many similar tools out there. I generally use Opencode, but also Claude code, antigravity and sometimes Kilo code on VS Studio. How can cursor be worth even 10% of 60B?
I don't know what cursors market share is but it feels like 20-25% to me. That is not worth nothing. Then;
1) The data they have flowing through the system that enabled them to build composer (which is much better than stock kimi 2.5) and is presumably allowing the training of a new model on space Xs compute.
2) Cursors new 'github' replacement.
3) Enterprise sales/traction
If you look at all of these together, it's not implausible that they end up mostly 'owning' coding in 5 years time. If they replace GitHub with something more compatible with agentic coding and bring it into their whole ecosystem providing cloud and local agents, PR review and own frontier coding model.
It's specialised vs 'borg' isn't it. One way of thinking is that the world is owned by Anthropic/OpenAI and coding is just one of many things their model and software does. Another view is we have a 'coding with LLMs' company that specialises in this field of endeavour. Hard to say which wins, but I think they have a shot.
Personally my only objection to cursor is that it's more expensive. That's it, otherwise it is great to be able to choose say GPT-5.5 when I want to work on backend and Opus when I want to work on front end. Great to have PR review built in. If they were able to get composer 3 to as good as GPT5.5 / fable at the price of composer 2.5 they'd be winning on price again.
> If you look at all of these together, it's not implausible that they end up mostly 'owning' coding
They really need to change their trajectory then?
And regardless being owned by xAI, a failed AI company which turned into a datacentre operator probably won't help them to achieve that.
> Hard to say which wins, but I think they have a shot.
The market for "coding harnesses" and "AI IDEs" is already oversaturated and they are effectively a commodity at this point, you can use any of them with any provider more or less interchangeably.
> They really need to change their trajectory then?
They need to step up progress sure.
> And regardless being owned by xAI, a failed AI company which turned into a datacentre operator probably won't help them to achieve that.
I think near unlimited access to compute is exactly what they need to train a frontier level coding model and serve it cheaply and profitably.
> The market for "coding harnesses" and "AI IDEs" is already oversaturated
I think my entire point was that it's not just a AI IDE. It's a coding focused model (currently Composer 2.5, soon hopefully something better), a Github Replacement, PR review/Bug Bot, Cloud Agents and so on and so forth. It's a ecosystem. An enterprise signs a MSA with you and gets everything they need all in one place.
Yes because Grok failed and they now have "unlimited" compute they can sell to other. I mean you are right that if they did X, Y and Z they could be very successful but their is no indication that might happen. In any meaningfully way seems like Cursor has peaked a while ago.
> An enterprise
Well either they are the type of companies which just buys whatever Microsoft is selling OR they let their developers to mostly pick what they feel is the best tool for the job on their won. I don't think there is that much in between (and its a cutthroat market e.g. GitLab)
> a Github Replacement, PR review/Bug Bot, Cloud Agents
Those things are a dime a dozen, you can vibe code them in weeks/months and there plenty of options on the market already. Well not Github of course, but there are various reason for that which have little to do with product quality and features (not that I think there are many companies which could build a meaningful GH replacement in a realistic time period despite its many flaws).
I just don't really see a huge income stream for dev tools companies (just like there never was) they can skim of something from the top by reselling AI models (generally at zero or negative margins..) but that's not the most lucrative business model when you have no real moot.
By not succeeding? It's an also ran, a closed proprietary model which is behind Anthropic, OpenAI, Google and a a bunch of Chinese companies, how do you make money with a produce like that? (besides the absurd IPO of course...)
For a lot of people, Grok is the first AI they got to use through Twitter. Grok does get quite a lot of usage, and isn't out of the game - coding tools aren't the only use case for AI.
Google glass has been discontinued? Besides, many people use it on Twitter everyday. Usage is not limited to what you can see on the Openrouter dashboard.
these users are probably losing the company money.
the failure is in converting regular people into actual ai product consumers. Companies are realising that the money is not in regular consumers but in enterprise and they are not considering grok as a serious alternative.
if anything, the name, the branding and the x/twitter affiliation has hurt adoption from money makers rather than help it.
so yes, people know it, but no one is willing to pay for it
Depends, Grok stimulates engagement and pushes to stay on the plaform and feed it data. If anything, it helped justify a massive valuation for SpaceX, which is a metric of success for most corpos.
It helped the valuation but as just like SpaceX hallucinations about the space data centres. Doesn't mean its not a crappy low end model itself. Btw is Twitter even making any money?
There's a HN article and discussion about Anthropic expanding to use Colossus 2. https://news.ycombinator.com/item?id=48214017 I think it's fairly clear that grok isn't using as much compute as expected.
So far seems like none of those use cases have generated meaningful income streams? The consumer/non-developer market is mostly dominated by OpenAI and Google anyway...
> The market for "coding harnesses" and "AI IDEs" is already oversaturated and they are effectively a commodity at this point, you can use any of them with any provider more or less interchangeably.
Yes and no. I've used a few different harnesses with closed and open models and there is definitely something going on that makes some harnesses work better than others. Many of the differences are hard to pin down and some are things people don't care about. But I wouldn't say they are commodified just yet.
1. Memory use. I have colleagues complaining that Clause Code uses several GB of memory. Meanwhile I haven't heard about that regarding codex or goose, or even opencode for that matter.
2. Suitability for local models. When you use Anthropic models, you use Anthropic as a provider. They can have software between the model and your harness that will fix issues with the model. One notable thing that even the best open weights models struggle with is broken tool calls. There is a lot that a harness can do to fix broken tool calls when working with a straight up ollama running a raw GGUF file.
3. Ease of use with non mainstream models. OpenCode has GREAT coverage of models/providers. Goose, less so as it relies on people to set up their own anthropic or openai compatability settings. e.g. Zed doesn't let you use Z.ai (which, if you speak British English, sounds ironic because "zed ai" isn't directly supported by Zed the editor).
4. Worktree support. Opencode and probably all the TUI harnesses works in a local directory - so you need the terminal to be in the worktree. Zed, however, works centrally on your git repo and tracks the worktrees so you can bounce around your work in a single window.
Of these, '2' is maybe the most important one but also the hardest to pin down as a feature. '3' is a one time cost. Of course '1' could be a blocker for someone using a macbook air or neo.
I agree, Composer Fast 2.5 is getting really good. I started using it for a personal project after I had to switch from Sonnet because I hit the API limits, and I was surprised by how good it has become.
I believe they have some very good training data because of all the data generated by people using the service.
This is the same data they used to finetune Kimi K2.5 to make their newer Composer models, which benchmark substantially better than Kimi K2.5.
I've heard they also want to build their own base models, which will also benefit from their large amount of high-quality training data. Which will solve Grok's model quality problem.
This is all unsourced conjecture of course. But it's what I've heard.
Also from what I understand (not my day job) we're now at the point where the post-training tuning (RLHF etc.) is increasingly important since pre training no longer scales.
So it's not really fair to call it "fine tuning", it's an important part of building a coding model in 2026, and cursor have done a pretty good job with Composer
they are paying for marketshare/customer base. Cursor has a good chunk of it.
xAI overbuilt their data centers - they can't find paying customers for them, that's the reason they made deals with other companies like Google to use their own datacenters.
Cursor has the opposite problem of not having enough capacity. So this works well for them together.
Weather it's worth it - if you beleive that AI will solve every problem then having a piece of the pie early on might be worth it.
Remember how when google bought youtube for 1.65 billions people thought they are crazy? Or when facebook bought instagram.
60B is a crazy number but might be worth it for someone fighting for world dominance :)
xai is on the line to delivery capacity they already sold to Google and most analysts think they are 50/50 on actually meeting it.
the only proof they have capacity is that musk claims all the money they are burning is going to datacenters and gpu (mostly because if he put it on anything else the lie would be obvious)
Or are they paying for talent? It seems like xAI is sorely lacking in talent, most likely due to the CEO and folks' aversion to him. By throwing around some SpaceX monopoly money he can trap some talent with retention clauses and try to invigorate his failed AI business.
I think the argument for Cursor is that it's the dominant tool that enterprises are using for coding, so the theory is Cursor wins that as the "model agnostic", it has a phenomenal Enterprise Sales Team.
From a valuation model - $4B ARR with rapid growth, and the ability to shift traffic to internal models (honestly, massive amount of the time "composer" - their internal model is fine, and obviously going to get better). Say 17x Multiple which isn't unheard for a rapidly growing Startup with solid future structural profit elements (moving to internal model) - that gets you to $68B.
> so the theory is Cursor wins that as the "model agnostic"
But there are many model agnostic harnesses out there: OpenCode, Roo, Cline, and many others. And even Claude Code can be setup to use non-Anthropic models.
As a Cursor user, I don't have to have thought about the providers behind the compute - I get name brand Claude, or cheap Kimi, or Grok, and it's all got roughly the same agentic experience, and only one bill. Enterprises love this.
If you resell something worth $5 for $5 while having to pay for R&D and operating expenses that's not exactly comparable with a company that's selling actual products.
> Say 17x Multiple
On an extremely low margin business it is, yet again that wouldn't be the stupidest thing in today's market.
It can't as long as there is plenty of AI without it.
The real differentiatior is that if $60B today turns out to be all thrown away in a worst-case scenario, it would be easily more affordable and there would be less negative impact than $47B at the time if it was all thrown away on Twitter.
We’re in the new era where startups boast about and bought based on revenue and not on just a number of users with unclear path to monetizing as it had been for the previous couple decades.
We can also note that we see Thrive Capital (Kushner) again in a win.
Where else are you going to get access to a real-time fresh high quality stream of human intelligence to grow your baby AGI? You can’t buy Codex, Claude, Copilot, so what’s left?
How are you switching between like 5 different editors lol. Bro sloppers will do anything to get their fix. Like the old people at the casino switching slot machines all day based on some occulted understanding that only they think they have.
