Why AI coding tools like Cursor and Replit are doomed - and what comes next

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ZDNET's key takeaways

• AI-based coding tools won't be able to compete with the LLM giants.
• Observability is one possible way to differentiate the tools.
• Some startups will get acquired, others will go out of business.

Silicon Valley has spent billions of dollars funding startups that use artificial intelligence to generate computer code automatically, such as Replit, Cursor, Harness, Windsurf, Augment Code, and All Hands AI.

Despite all that money, the startups may still end up going out of business or being acquired by much larger software companies. Cursor and the rest lack viable business plans to distinguish them from Anthropic, OpenAI, Google, Microsoft, and other foundation model providers, who control much of the underlying technology, according to a seasoned tech executive who's surveyed the field.

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