The companies declined to disclose financial terms of the transaction, but said it involves a mixture of cash and equity. They said Graphite will continue operating as an independent product, but with deeper integration into Cursor’s code editing platform. The deal is expected to close in the coming weeks.

Cursor CEO, Michael Truell, told Fortune the acquisition addresses what he sees as an emerging bottleneck in software development.

“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 said. “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 three years ago. It’s becoming a larger portion of people’s time as the time to write code shrinks. Graphite has done lots of work to improve the speed and accuracy of code review.”

AI code editors like Cursor help programmers while they’re writing code—making suggestions, explaining the function of a particular piece of code, and helping teams move around large projects faster. Graphite, used by companies like Shopify, Snowflake, and Figma, helps teams review changes and decide when code is ready to ship, after it’s written.

“We focused on the writing side of things. Graphite has focused on the review side of things. We think the two together can make something even better,” Truell said.

Graphite CEO Merrill Lutsky said that the two companies “have an almost identical vision for what the future of software development looks like.”

“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 end-to-end platform,” he told Fortune.

In the immediate term, both products will remain separate, with Graphite maintaining its independent brand. Throughout 2026, Truell said, 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 code.

Lutsky said concerns about AI-generated code quality have been a major focus for Graphite. “We’ve invested deeply in ensuring that code written with the help of AI is safe and high-quality,” he said. “Together with Cursor, we’re going to double down on that and help teams build secure, efficient, high-quality products.”

An end-to-end AI coding platform

The acquisition comes just one month after Cursor, which is valued at $29.3 billion, announced it had reached $1 billion in annualized revenue. The company has seen a rapid rise since it was founded by a team of four MIT graduates in 2022. The company’s AI coding tool, which first launched in 2023, has seen major deployments at companies like Salesforce, which according to Truell, experienced a 30% uplift in engineering productivity from using Cursor.

Graphite is not Cursor’s first acquisition. The company bought AI coding assistant Supermaven in November 2024 and scooped up talent from enterprise startup Koala in July.

Graphite, which Lutsky cofounded nearly five years ago with Tomas Reimers and Greg Foster, raised $52 million in a Series B round in March 2025. The company told TechCrunch revenue grew 20X in 2024 without disclosing absolute figures, and expanded to serving tens of thousands of engineers at more than 500 companies, including customers such as Shopify, Snowflake, Figma, and Perplexity.

Lutsky said the deal offers Graphite the opportunity to build a more unified development platform. “We’ve long dreamed of connecting the surfaces where we create, collaborate on, and validate code changes,” he said, adding that the deal dramatically accelerates that timeline.

The AI coding market is booming

The AI coding market has exploded over the past two years as enterprises rush to adopt AI tools in hopes of productivity gains. The U.S. market for AI coding tools was valued at $1.51 billion in 2024 and is expected to reach nearly $9 billion by 2032.

Big Tech companies including Microsoft and Google are automating large parts of their coding. According to Microsoft CEO Satya Nadella, as much as 30% of the code within the company’s repositories is now written by artificial intelligence, while at least 25% of new Google code is generated by AI, according to CEO Sundar Pichai.

Companies are betting that AI coding tools can supercharge software engineers’ productivity, but early studies have been mixed. A July study by nonprofit research organization METR found that experienced developers using AI tools were actually 19% slower when using an AI coding assistant, even though they believed they were faster. Consulting firm Bain & Co. also reported in September that real-world savings from AI coding have been “unremarkable.”

Nevertheless, the deal positions Cursor more aggressively in an increasingly competitive market, with OpenAI, Anthropic, and GitHub Copilot among those vying for dominance in the space. Most of these tools, however, are built on top of the same underlying “foundation” AI models rather than developing their own. Cursor, for example, uses Anthropic’s Claude and allows users to choose models from other providers to power code generation.

While Graphite is also backed by Anthropic, Lutsky downplayed concerns about competing directly with large model providers. “The larger base-model companies are trying to compete across many different verticals,” he said. “Cursor is solely focused on how engineers build with AI, and that focus really sets them apart.”

Truell also brushed off the threat from major AI labs. “Our approach here is to use a combination of the best technology that partners have to offer and then technology that we develop ourselves,” he said. The company has focused on cherry-picking the best available models, supplementing them with proprietary ones, and wrapping everything in what it argues is a superior user interface.

As for next year, Truell said the company currently has no additional deals planned, with Cursor focused on building out product features rather than eyeing an IPO.

“Our goals for the company are very ambitious over the course of the next decade,” he said. “We think that this is the decade in which coding will be automated, and the way in which professional teams build and deliver software will change across the entire software development life cycle.”