Cursor Changed How We Write Code — Now Every IDE Is Scrambling to Catch Up
Four MIT dropouts built the fastest-growing SaaS company of all time — $2B ARR in under three years, a $29.3 billion valuation, and four new billionaires. But a controlled study says their tool makes experienced developers 19% slower. The AI coding wars are just getting started.
By Erik Sundberg, Developer Tools · Mar 9, 2026
Cursor hit $2B ARR faster than any SaaS company in history, but a landmark study found AI coding tools make experienced devs 19% slower. Here is the full breakdown of the AI coding wars, from vibe coding to agentic engineering.
Frequently Asked Questions
How much revenue does Cursor make?
Cursor (made by Anysphere) surpassed $2 billion in annualized recurring revenue (ARR) in March 2026, roughly doubling from $1.2B ARR in late 2025. The company grew from $100M ARR to $1.2B ARR in a single year — a 1,100% year-over-year increase — making it the fastest-growing SaaS company of all time by the metric of time from $1M to $500M ARR.
Does AI coding actually make developers faster?
The evidence is contradictory. A rigorous randomized controlled trial by METR in July 2025 found that AI coding tools made experienced open-source developers 19% slower on real-world tasks. However, vendor-sponsored studies from GitHub, Google, and Microsoft report 20-55% speed improvements on scoped tasks like writing functions and generating boilerplate. The critical nuance is that developers in the METR study believed they were 20% faster even when they were measurably slower, revealing a significant perception gap.
What is vibe coding and is it still relevant?
Vibe coding is a term coined by Andrej Karpathy in February 2025, defined as fully giving in to the vibes, embracing exponentials, and forgetting that the code even exists. It was named Collins English Dictionary Word of the Year for 2025. However, as of February 2026, Karpathy himself declared vibe coding passe and introduced the term agentic engineering, which describes orchestrating AI agents that write 99% of the code while the developer acts as oversight and quality control.
How does Cursor compare to GitHub Copilot?
Cursor and GitHub Copilot take fundamentally different approaches. Copilot is a plugin that works inside existing IDEs like VS Code and has over 20 million users with 1.3 million paid subscribers. Cursor is a standalone AI-native IDE (a VS Code fork) with over 1 million users and 360,000 paying customers. Cursor is growing faster in revenue — reaching $2B ARR versus Copilot being bundled into Microsoft's broader GitHub pricing — and offers deeper features like multi-agent parallel coding and background agents that open pull requests autonomously.
Is AI replacing junior software developers?
The data suggests significant displacement. A Stanford University study found employment among software developers aged 22-25 fell nearly 20% between 2022 and 2025. Entry-level tech hiring decreased 25% year-over-year in 2024, and 54% of engineering leaders plan to hire fewer juniors as AI copilots enable senior developers to handle more work. Forrester forecasts a 20% drop in computer science enrollments. However, juniors who are AI-ready and can orchestrate AI tools remain valuable.
What happened to Windsurf (formerly Codeium)?
Windsurf had one of the most dramatic collapses in recent startup history. OpenAI agreed to acquire the company for $3 billion in May 2025, but the deal fell through when the exclusivity period expired in July 2025. Google then executed a $2.4 billion reverse-acquihire, poaching CEO Varun Mohan, co-founder Douglas Chen, and key research leaders. Days later, Cognition AI (maker of the AI coding agent Devin) acquired what remained of Windsurf — IP, product, trademark, and remaining team — and was subsequently valued at $10.2 billion.
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Topics: Developer Tools, AI, Software Engineering, Coding
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