True Value
AI Coding Startups Like Cursor Have Gotten Too Rich
The companies are growing very fast, but high costs and tough competition may mean weak profits.
Investors have embraced vibe coding as the next big thing in artificial intelligence. They are pouring cash into fast-growing companies offering coding assistants that can speed the work of software engineers—or potentially replace them.
That optimism may be shortsighted. The companies that make AI models, such as OpenAI and Anthropic, are developing their own coding assistants, creating serious competition. Most coding assistant startups rely on these same AI giants to run their models, which could crimp profitability. These companies may also struggle to differentiate themselves, which could lead to high churn rates.