So SpaceX bought a $60B Option on Cursor, plus a bunch of services, for $10B.
If strike date comes and Cursor is in fact worth less than $60B... they can move to acquire it for that price. Or just let it "expire". And if it's worth more, they get a savage good deal. If the services were worth $8B anyway, it's hard to lose.
It seems less crazy to me through this lens. A straight acquisition, today, at $60B would in fact be crazy.
What's crazy is that a company that sells an IDE (that's not even a particularly good one compared to competitors like JetBrains) integrating some AI plugins could be worth more than $60B...
In terms of IDE yeah it is not that great.
I do have Copilot in VSCode and Cursor.
I thought both should be equal in solving problems - turns out Cursor with the same model selected somehow was able to solve tasks that Copilot would get stuck or run in loops.
They have some tricks on managing file access that others don’t.
Cynics on HN easily dismiss AI service wrappers (and many of them are in fact overblown and not worth their own code). But writing a genuinely good harness with lots of context engineering and solid tool integration is in fact not that easy. The biggest issue is that model providers also see what the community likes and often move on with their own offerings that are tailored to their own models, potentially at the training stage. So even if you have the best harness for something today, unless you are also a frontier LLM provider, there's zero guarantee you will still be relevant in the future. More like the opposite.
> But writing a genuinely good harness with lots of context engineering and solid tool integration is in fact not that easy.
true, but its not worth $60 billion fucking quid.
It's not like someone paid $60 billion for a product the way you pay for bananas at the store. They invested a much smaller amount and essentially bought an option to acquire. And even if you don't believe the company's assets are worth the current valuation, an acquisition can still make sense if you believe that valuation will go up further. And if they actually do acquire, it will probably still not be in cash. They'll just be swapping stocks. That is essentially how all startup funding works. There is nothing strange about this. It merely reached new dimensions thanks to AI.
it's insanity.
the whole thing is driven by irrational stock market investers who NEED ai to be the thing that saves the world.
they're betting everything on it.
> (...) writing a genuinely good harness with lots of context engineering and solid tool integration is in fact not that easy.
This. They are after the harness engineering experience of the Cursor people, I'd assume the they want to absorb all that into Grok's offerings.
The value and the room for innovation on the harness side seems to be underestimated.
Oddly the harness also affects model training, since even GLM/Z.ai for example train (I suspect) their model on the actual Claude Code harness. So the choises made by harness engineers affects the model. For Kimi/Moonshot and OpenAI the company makes their own harness. Alibaba uses Gemini.
Very interesting dynamics.
There are plenty of harder things in the world and very few are worth 60B.
Something being harder and attributing value to that makes no sense. Sure a big moat is important for value but "difficult to do" is just a unidimensional angle.
Isn't Codex TUI available for free though? Besides others like Pi and OpenCode of course.
It can use local/oss models, but it doesn't make it simple to do (easiest with ollama) and it's not clear what else you 'lose' by making that choice.
If you had a really good (big) local model, maybe it's an option, but on the more common smaller (<32b) models, it will have similar problems in looping, losing context, etc. in my experience.
It's a nice TUI, but the ecosystem is what makes it good.
They're using the code intelligence from the IDE to run the AI, while Claude Code only does greps.
AI coding is much more than just the model - all the tools that human use in IDE are also useful for AI. Claude Code on the other hand just works with grep.
Sure, but is it worth 60 billion?
Their annualized revenue run rate is on track to surpass $6 billion by the end of 2026 so it's not ridiculous for them to be valued at $60 billion at some point. Also worth noting that if they do get access to SpaceX compute, they could start pretraining their own model. Composer is good but its built on top of Kimi 2.5.
Definitely not if someone frames it "shitty IDE with some plugins".
But if someone frames it "engineering talent that knows how to make LLMs even better at software development than competition" it might.
I see with my own work it works so it is not like Devin that was basically a scam that was valued at 10 billion.
In this kind of context yeah feels like it is quite possible to be worth 60 billion.
SpaceX thinks so.
SpaceX the space rocket and internet satellite company? Or SpaceX the Elon Musk piggy bank used to buy up all his financial misadventures?
You mean Musk thinks xAI need to be shown making AI investments to keep getting outside funding.
Because of user count? Same was said about instagram. with all due respect, devs don't seem to understand business
Or devs are just different users who care about different things and have different experiences.
Reminds me of the famous dropbox post: https://news.ycombinator.com/item?id=9224 - I don't even know if dropbox still exists in 2026 but i'm still happily using rsync and mailing things around because dropbox has just absolutely never worked reliably for me, unlike my 2007 gmail account.
Likewise, if it were up to me, instagram and any business whose business model revolves around ads would be banned (because ads would be banned because advertisement is harmful in general).
It's fine to care about different stuff, but if you want to understand the valuation of a company, then your experience only goes so far. it's not going to make any sense unless you broaden your scope of interest to the metrics that impact valuation.
I don't read OP's post we're talking about ("What's crazy is that a company [...] could be worth more than $60B...") as not understanding, but as disagreeing that our world should work in such a way where this state of affair is even remotely considered acceptable
It's an interesting idea that society should somehow prevent companies valuation being linked to how many people use their product.
Unsure how it would work in practice.
But do devs know a which IDE is better? That seems to be a rather important question here.
It's not 'the' most important question.
Who are the users? I haven't seen many pro users using cursor
Companies. Single devs can jump around IDEs and TUIs more easily but that’s not what companies tend to do.
Their revenue and growth justified it. Plus, for xAI that could be the only way to get a SOTA coding model they want so hard.
I thought cursor became mostly obsolete with Claude Code and Codex TUIs?
The solution is use both. They both have their usecases. Cursor's autocomplete and quickly highlight a few lines -> throw into context, plus it's got a very good file index/API (which burns much less tokens than Claude's grep'ing) and whatever else they are doing underneath to optimize it for coding.
Claude is still gold standard if you're not in an IDE though.
That matches my anecdatal experience with a couple dozen devs. Many wnet hard on the Cursor train and have mostly gotten off now with CC and Codex TUIs available
Are TUIs not yesterday’s hot thing?
The way I work now in the Codex desktop app is that I spin up 3-5 conversations which work in their dedicated git worktree.
So while the agent works and runs the test suite I can come back to other conversations to address blockers or do verification.
Important is that I can see which conversation has an update and getting desktop notifications.
Maybe I could set this up with tabs in the Terminal, but it does not sound like the best UX.
General Motors is worth $72B.
can't X recreate one with 1B? As an IDE, honestly I can't even understand it needs more than 1M to create
It's not about the tech, it's about the pool of users that use Cursor, by acquiring Cursor you get a bunch of users + subscribed and already paying pool of people instead of just rebuilding something from scratch and convincing people to change their tools with a new one
Is it about the users or the data the users generate. Pretty easy to see the day devs are replaced by the data they themselves generated. Companies are only going to get one chance to grad this data. Similar to the internet cutoff.
the IDE has little value
What they want is the massive user base, the data (Cursor has a lot of high quality coding data for training), the teams expertise in coding models and agents, and the Composer models
60 billion is a large number but these frontier labs are burning billions a month in compute alone, and SpaceX is IPOing soon so they'll have a lot of cash to spend
How massive is the Cursor user base?
> What's crazy is that a company that sells an IDE (that's not even a particularly good one compared to competitors like JetBrains) integrating some AI plugins could be worth more than $60B...
yes. plus $2b ARR, 1m DAU
They are now a Codex clone and without the subscription pricing. You have to spend thousands to get what you get from a $200 Codex subscription. How do they compete with this except from users who haven't caught on yet, or businesses that are unbothered to spend thousands a month per dev and wouldn't consider just subscribing to 1-3 $200 subscriptions instead?
And their price is so high because it's markup on API rates. API rates, even without markup, are just insanely irresponsible for anyone to be spending on full-time daily usage.
API rates on local models are quite cheap, and you can even run them locally. Yes, the hardware for doing so at speed is expensive, but people used to drop the equivalent of what would be $50k or $100k today on an individual workstation for full-time use. It's justified if the productivity gain is strong enough.
> users who haven't caught on yet
They are catching up fast!
https://www.businessinsider.com/chamath-palihapitiya-ai-cost...
Tellingly, from his full post: "Mostly because I do not yet see an equivalent uptick in productivity or revenue..."
https://x.com/chamath/status/2029634071966666964
I suspect that as the value a company provides is more than its code, then increasing code churn does not lead to an equivalent increase in revenue. Even for a tech company, a business' concept, connections, knowledge, assets, non-coding staff, etc.. are a significant value and increasing code doesn't increase the throughput of that value. For non-tech companies code is the grease in the gears, not the gears themselves.
What's the advantage over github copilot actually? They seem to have all the same access and features (except for this sheduling thing?) for cheaper.
> users who haven't caught on yet
If you think this of users who use cursor then I don’t think you’ve used cursor much at all.
I've used Cursor a lot. Until recently it was mandated by my employer. I can't see the attraction at all. It's a (bad IMO) IDE integration, a reasonable model (but I still generally preferred Claude over Composer), and a bunch of other tools that weren't very developed (like cloud environments and multi-agent orchestration). It's a suite of tools, most of which have superior alternatives. What am I missing?
You have model choice in cursor… why would you use composer?
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What do you mean?
Only the foundation model companies offer cheap/subsidized compute.
If you're an app layer company, you're offering a 10x worse deal to your customers.
Foundation model companies are willing to lose money to win loyalty. Remains to be seen if it'll work.
If you’re more worried about cost than you are being productive and getting good results then sure, stick with foundational model company apps.
“Being productive” without taking inputs/costs into consideration is an oxymoron.
A company that cares more about cost than results is probably a terrible company to work for. They will give you 10yo dell laptop with 8gb memory and complain that you’re slow when it takes 15m to build the application.
So no it’s not an oxymoron.
Productivity is literally a statement of the relationship between the result and the cost, presumably you found that out after reading the reply and that is why you switched from "productivity" to "results" in your reply.
Until you learn what productivity is we can’t continue the conversation.
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API rates are the real rates. Subscription costs are the "first hit is free" subsidized pricing.
Cursor sells its own models as well now
It's own RT'ed open source models right?
Welcome to the era of vibe-based valuations
* MicroSoft is shaking in the corner lol
MS is doing just fine I'm sure
AI yielding such incredible cost savings. /s
Cursor is useless
> that's not even a particularly good one compared to competitors like JetBrains
Massive understatement calling it "a not particularly good plugin". If it were that simple there wouldn't be a need to even do this.
Paying $10B for the option is also crazy though. Paying $10B for the thing outright and not just an option would be absurdly high.
Is this cash or compute? Elon has one of the world's biggest compute clusters spun up, and little inference demand to speak of.
Trading billions worth of idle compute, in exchange for a high-strike call option on the #3 player in the most-promising-vertical for AI, plus (presmuably) some access to their data, starts to sound like not a bad trade. Especially if you're pre-committed to betting your entire rocket company on winning in AI, and you're currently in sixth or seventh place.
> you're pre-committed to betting your entire rocket company on winning in AI
SpaceX has invested a small amount as a share of its value in XAI, and could survive the loss of its investment.
It's true he could write off xAI today and the company could still fetch a trillion-dollar valuation. But I was more referring to his stated intentions - between his stated plans, his actions taking SpaceX from a profitable company to spending basically all their revenue (plus a rumored large chunk of what's raised via its IPO) on AI, and seeing his tendency to make bet-the-farm bets on Tesla, I think it's fair to say he's committing to bet all of SpaceX on xAI.
I heard he made a deal with a company to use his clusters. Is there good data on demand for Grok? Seems like relatively little chatter at least, in spite of tremendous investment.
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I hate Trump as much as the next guy, but what is that evidence, again?
He had a very close, decades long friendship with the most notorious sex-trafficker-of-children-to-rich-creeps in modern history for decades. And when imprisoned, that infamous pedophile died while in a federal prison under Trump's control, with a strange gap in the CCTV video footage. And Trump's handling of the entire Epstein Files saga makes it clear that Trump is described extensively in those files and he desperately wants to conceal it. What could be in there that he would use the entire justice department to try and redact? Trump is shameless about things that are legal even if they're salacious (like sleeping with porn star Stormy Daniels), so you have to wonder, what could Jeffery Epstein's good friend be trying to conceal?
Also, he owned the Miss Universe org (including Miss USA and Miss Teen USA) for decades, and he was known to walk into the dressing rooms of teen contestants as young as 15 while they were undressed. [0]
Also, he bragged about molesting women, and a court of law found that he sexually assaulted E Jean Carroll.
I haven't proven the case that Trump had sex with a minor, but there's way more than enough probable cause to believe it's more likely than not.
[0] https://web.archive.org/web/20200111171647/https://www.rolli...
Obviously this looks very bad but you don't seriously think it constitutes evidence?
you don't seriously think it constitutes evidence? Do you even know what the word evidence mean? It is not the same as proof.
Maybe you would want to insert the term "circumstantial" or so.
Definitionally both circumstantial and direct evidence are forms of evidence. No modifier is necessary.
And incidentally you can be convicted in a court of law purely on circumstantial evidence, and that's the place in society where we have the highest standard of proof. The evidence all being circumstantial is not a gotcha.
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https://www.thedailybeast.com/new-evidence-corroborates-clai...
Yeah that's pretty bad.
This isn't court. The evidence, such as it is, is all of the smoke which commonly motivates people to look for fire. The strongest and most comprehensive that I've seen is the argument that if Trump was not implicated in the Epstein files, he would be publishing them in free book form himself and forcing every media outlet to advertise it. Slight exaggeration, but I think truly only slight.
Not really relevant to the thread, but there are simple answers to the "eViDeNcE??" question. You may have already known this.
Again, circumstantial and speculative.
Clearly you don’t and that disingenuousness is frowned upon in discussions here.
So, where’s the evidence?
https://www.thedailybeast.com/new-evidence-corroborates-clai...
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Someone who works on a “sugar dating” app advocating for synthetic child porn? That’s… uncomfortable?
To say the least. Great catch! 'O brave new world, that has such people in 't.'
Has the availability of deepfake porn generation reduced the demand for deepfake porn featuring real people? When deepfake generators are capable of creating convincing imagery of flawless ideal fake humans, why do you suppose there’s so many real humans who report being non-consensual subjects of deepfake porn?
> Has the availability of deepfake porn generation reduced the demand for deepfake porn featuring real people?
yes
> When deepfake generators are capable of creating convincing imagery of flawless ideal fake humans, why do you suppose there’s so many real humans who report being non-consensual subjects of deepfake porn?
?
One obvious argument is what it was trained on.
Doesn't have to be. You can train it on normal pictures of children and nude images of adults.
> Doesn't have to be. You can train it on normal pictures of children and nude images of adults.
You say this so casually, as though it were a normal thing to know, or as if a normal person would know it. Does that actually seem true where you live right now?
And how do you know that, anyway, Harsh? I mean, all those "unblocked" games you stole to give away and that you also put on Github, that's one thing. But this...
Come on, it's not hard to come up with this idea. And it's not even true, model trained on clothed children and nude adults wouldn't know how children's genitals look like.
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If it's not in an 8K filing it isn't real.
Problem is basically, that if the option works out (Cursor truly has the talent to train a frontier model on SpaceX's infrastructure, and were simply lacking the infra before) the fair price would be way way more than $60B.
OpenAI tried to acquire Windsurf last year for $3B and couldn't.
Seems like Elon's move is two fold
1) A gamble based on cursor's compute constraint 2) if 1) plays out, he can purchase cursor via shares of spaceX over valued shares, at a fixed price should the valuation increase.
> Cursor truly has the talent to train a frontier model on SpaceX's infrastructure, and were simply lacking the infra before
Wild conjecture.
I think this was an “if” scenario
This makes more sense that my initial reading of it indeed
Is that so or would those 10B be discounted from the purchase?
not that it isn't wild regardless
I'm not sure what you're referring to by "that" but I think you're right that it's 10B to not purchase or 60B to purchase, so as an option posting $10B for an option with a $50 strike price.
It reportedly has a $2B ARR, and a 5x multiplier doesn't seem insane to me, but who knows, honestly
But it's paying a 5x ARR multiplier for the right to buy at a 30x multiplier.
They have 2B ARR because their business model is about selling models cheaper than they cost.
The main frenzy with Cursor started when you could access Anthropic models practically for free.
Otherwise it is just VS Code.
> Otherwise it is just VS Code.
This is a bit simplistic. It's the VS Code that everyone used before cc came to town. Real devs, on real projects. All that data they collected is worth a lot more than "just vscode". Their composer2 is better than kimi2.5 and it's just a finetune on that data.
xAI had a decent model in grok4 (it was even sota on a bunch of benchmarks for a few weeks), but they didn't have great coding models (code-fast was ok-ish but nothing to write home about, certainly nowhere near SotA). Now that they've been banned from using claude, they'll get their expertise + data to build a coding model on top of whatever grok5 will be + their cluster for compute.
It doesn't sound like a bad plan to me, financial shenanigans or not.
What data? Their commercial terms promised they wouldn’t keep any for training.
There's a lengthy discussion to be had here, and there's enough lawyerspeak in every provider's data retention policy to wiggle out of anything. A few notes from their current data use page:
> If you enable “Privacy Mode” in Cursor’s settings: zero data retention will be enabled for our model providers. Cursor may store some code data to provide extra features. None of your code will ever be trained on by us or any third-party.
Note the "may store some code data" and "none of your code will ever be trained on". In general you never want to include actual customer code in training the data, because of leaks that you may not want. Say someone has a hash somewhere, and your model autocompletes that hash. Bad. But that's not to say you couldn't train a reward model on pairs of prompts + completions. You have "some code data" (which could be acceptance rate) and use that. You just need to store the acceptance rate. And later, when you train new models, you check against that reward model. Does my new model reply close enough to score higher? If so, you're going in the right direction.
> If you choose to turn off “Privacy Mode”: we may use and store codebase data, prompts, editor actions, code snippets, and other code data and actions to improve our AI features and train our models.
Self explainatory.
> Even if you use your API key, your requests will still go through our backend!
They are collecting data even if you BYOK.
> If you choose to index your codebase, Cursor will upload your codebase in small chunks to our server to compute embeddings, but all plaintext code for computing embeddings ceases to exist after the life of the request. The embeddings and metadata about your codebase (hashes, file names) may be stored in our database.
They don't store (nor need to store) plain text, but they may store embeddings and metadata. Again, you can use those to train other things, not necessarily models. You can use metadata to check if you're going in the right direction.
At 60B they might do it anyway and then pay 200M in fines when the court rules against them.
xAI needs a dev tool to compete with Codex and Claude Code.
Cursor needs their own 1st party backend model.
Sounds like a match made in heaven.
Not quite first party, but composer 2 is far superior to grok for coding. Unless you're eluding to them using SpaceX infra to train their own model vs. using grok
2B ARR at what cost base?
Not only is it almost certainly compute (“services”) it’s likely priced at Anthropic rack-rate, or at least what Cursor’s been paying Anthropic.
The cluster’s already paid for, so likely in the $2B range for operating cash needs. Not more than $5.
If I imagine bringing in Cursor’s team to build a frontier model, ideally combined with Grok, which has one of the few truly proprietary data feeds available to it, and with a much larger custom model Cursor can solidify a place, and I get to do a stock swap to buy it, this sounds like a bet worth making.
Upshot - I bet there’s an MS/oAI deal on IP on the back of this; meanwhile the cluster goes brrr.
But they also get a whole bunch of AI Services from Cursor. Other comments have noted that xAI has fallen on bad times (idk one way or the other) so perhaps they were going to spend $5B on getting these services elsewhere, anyway.
SpaceX spending $1B a month on various AI services seems ~plausible
(EDIT - Or maybe it's an IP transfer, or maybe it's over a longer time horizon. Idk but SpaceX clearly expects value from 'our work together' even if they don't exercise.)
$1B per month on AI services does not seem remotely plausible to me... Engineers don't consume that many tokens...
And on the AI development side they're the ones providing compute in the form of a "million H100 equivalent Colossus training supercomputer"... On top of the cash.
Cursor has no AI services, they do not develop their own frontier models. I see no reason to understand why $10bn for Cursor's services is an advantage xAI versus say a $10bn deal with Anthropic, OpenAI or Google.
It's true that Cursor doesn't have their own frontier models, but they are training their own models. They just aren't at frontier level yet. The $60B/$10B deal looks like a bet that this is a capital/GPU constraint rather than a capability one.
Those other companies wouldn't also toss in a purchase option.
But I agree that it's hard to articulate what Cursor services you could blow this much money on.
Maybe it is all just an option! Or maybe they get a bunch of IP either way?
Plausible how? Explain please.
Tokens. Tokens spawning sub agents using more tokens. Maybe some training too.
I didn't say it was Wise.
I said it seems within possibility for this, very particular, corporation.
This valuation is absurd. Perhaps a year ago- sure, but there have been so many iterations of this “kind of editor” since then, not to mention countless alternatives.
So for me it’s more of a data deal - Elon buying himself some insight into codebases and real dev usage patterns? Oh finally someone to use his dirty data centres
Cursor is still the best I’ve used are there others I should try?
I've been using Kilo Code (VS Code Plugin) for the last few days, and it does most of what I liked in Cursor without tying me to their particular subscription.
That said, people are increasingly migrating to CLI tools (Claude Code if you like the Claude models, Pi Agent if you want something that's highly customizable, Crush if you want something fun), or GUI tools that are less code-first (Codex GUI).
What makes Crush fun?
People keep saying this and they don't understand how businesses work.
Cursor has 1B in enterprise revenue. It doesn't matter if people can clone their product, those deals don't move slowly
> Cursor has 1B in enterprise revenue.
That' all well and good and they had astounding growth rates but doesn't mean much. And 1B in ARR is not _that_ much in comparison. Also, reportedly they spend all their revenue and they have no control over the spend-side. The models they use will very likely get much more expensive. All the foundation model companies have a competing product. Cursor has the first mover advantage, but that will only help then so much. There have been plenty companies who grew fast, had huge revenue, but failed in the end, because they never got profitable. That's also in the cards for Cursor, if they don't fundamentally change their business model
Put 1B into a better product and 10B into marketing. If you can’t beat their 1B in revenue, the market for making your money back on the Cursor acquisition also isn’t there.
If you pay 10B for options at 60B and the strike is 8B you ... just lost 10B. Thats it.
Add emotional hedges if needed but they are just emotional not financial.
Your argument is based on an assumption that cursor cannot lose value. Even if the market says it has.
No free lunch: an option is a bet for both sides. Zero sum.
3 things bug me Now why would cursor agree to that unless the offer was better than what their market valuation + acquisition premium < 60
This was a similar play for twitter by the same person
While an innovator at the time, today there are a lot of LLM coding solution, sold by model providers, model aggregators even open source ones , it’s not obvious what is being bought that isn’t a feature of vs code or one of the LLM agents ( as the dismissive saying goes )
What services could SpaceX possibly be buying from Cursor that would cost $8bn?
Despite their impressive ARR, Cursor faces existential threat from not only BigLabs (Claude Code, Open AI Codex) but also BigTech (AWS Kiro, Google Antigravity, MS VSCode). I am sure the usual suspects would have lined up to purchase Cursor, and the deal from xAI was probably the best of the lot. Marks an end to a remarkable sprint for a 3yo company, and an admirable exit (considering the recent discombobulation of Windsurf's), just as investor money and/or hype is going belly up.
Having tried most (all?) of the commercially available + open source options, and even tangential competitors like CC, Conductor, Antimetal, etc. I haven't found anything that's close to the experience of Cursor. The harness they've built is incredible.
I'd even go so far as to say that any competitors that are direct (windsurf, kiro, etc.) aren't even in the same universe. Cursor is just so much better, faster, has better features (plan and debug mode), and squeezes much better results/code out of the same models. They absolutely have some secrete sauce that the other options just don't have.
Cursor is my favorite of the VS forks. Agree that it delivers better plans than others. I prefer using Claude in Cursor over CC CLI when I am heads down going through bugs. I am disappointed in how "little value" in token use Cursor provides compared to others.
Do you have examples? I'm curious.
It has shown surprising stickiness. Occupying some middle ground between full adoption and still ~in the code.
I am starting to see some potential in moving back away from pure terminal, a mixed modality with AI. But it is not in the direction of IDE in any traditional sense.
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Do you really think anyone is using AWS Kiro or Google Antigravity? They are not real competitors in the slightest.