Cursor Acquires Graphite to Dominate AI-Powered Code Review and Speed Up Development

Cursor Expands Its AI Coding Dominance With Graphite Acquisition

Anysphere, the company behind the AI coding assistant Cursor, announced the acquisition of Graphite, a code review startup that uses AI to review and debug code. While the companies declined to disclose financial terms, Axios reported that Cursor paid "way over" Graphite's last valuation of $290 million, which was established when the five-year-old company raised a $52 million Series B earlier this year1

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. The transaction involves a mixture of cash and equity and is expected to close in the coming weeks2

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This AI developer deal positions Cursor more aggressively in an increasingly competitive market. Cursor, last valued at $29 billion in November, recently announced it had reached $1 billion in annualized revenue2

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. The company has been on an acquisition spree, having purchased Growth by Design last month and scooped up talent from AI-powered CRM startup Koala for a post-money valuation of $129 million in July, according to PitchBook1

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Addressing Critical Bottlenecks in Software Development Lifecycle

Michael Truell, co-founder and CEO of Anysphere, told Fortune that the acquisition addresses an emerging bottleneck in the software development lifecycle. "The way engineering teams review code is increasingly becoming a bottleneck to them moving even faster as AI has been deployed more broadly within engineering teams," he explained. "Over the past 2.5 years, Cursor has made it much faster to write production code. However, for most engineering teams, reviewing code looks the same as it did 3 years ago"2

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The strategic logic is clear: AI-generated code often contains bugs and cybersecurity issues, forcing engineers to spend considerable time on corrections. While Cursor offers AI-powered code review through its Bugbot product, Graphite provides specialized capabilities that complement this functionality1

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. Companies like Salesforce have already seen a 30% uplift in engineering team productivity from using Cursor2

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Stacked Pull Request Feature Accelerates Developer Efficiency

Graphite's standout capability is its stacked pull request feature, which enables developers to work on multiple dependent changes simultaneously without waiting for approvals1

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. This addresses a fundamental inefficiency in traditional workflows where engineers must wait until one code module is approved before starting work on the next one. The feature also avoids merge conflicts, situations where different developers attempt to modify the same piece of code3

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Graphite's software detects bugs, cybersecurity issues, and performance problems while also spotting code that fails to meet company-specific formatting guidelines or lacks proper documentation3

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. The company serves tens of thousands of engineers at more than 500 companies, including Shopify, Snowflake, Figma, and Perplexity, and reported 20x revenue growth in 20242

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AI Coding Competition Heats Up Amid Market Expansion

The acquisition unfolds against intensifying AI coding competition. Other startups providing AI-powered code review include CodeRabbit, valued at $550 million in September, and Greptile, which announced a $25 million Series A this fall1

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. The U.S. market for AI code tools was valued at $1.51 billion in 2024 and is expected to reach nearly $9 billion by 20322

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Big Tech companies are already automating substantial portions of their coding. Microsoft CEO Satya Nadella revealed that as much as 30% of code within the company's repositories is now written by AI, while Google CEO Sundar Pichai noted that at least 25% of new Google code is AI-generated2

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. However, early studies on debugging and productivity gains have shown mixed results, with a July study by nonprofit research organization METR finding that experienced developers using AI tools were actually 19% slower2

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Strategic Integration Plans and Shared Vision

Graphite CEO Merrill Lutsky said the two companies "have an almost identical vision for what the future of software development looks like." He added, "Cursor has defined the new way to write code, and we're defining how you review and merge it. Putting those together lets you build an an end-to-end platform"2

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. Graphite will continue operating as an independent product with deeper integration into Cursor's code editing platform2

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Throughout 2026, the companies plan to make it easier for developers' code to connect with the review process, including smarter, more context-aware code review that adapts to how teams actually write code2

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. Lutsky emphasized concerns about AI-generated code quality: "We've invested deeply in ensuring that code written with the help of AI is safe and high quality. Together with Cursor, we're going to double down on that"2

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The connection between Truell and Graphite's co-founders Lutsky, Greg Foster, and Tomas Reimers dates back to their time in the Neo Scholar program, a prestigious initiative for college students run by Neo, Ali Partovi's early-stage venture firm1

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. Both companies also share investors including Accel and Andreessen Horowitz1

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