Microsoft and Google Push Into AI Coding Tools Market

Microsoft and Google are mounting serious challenges in the AI coding tools arena, CNBC reported Monday, as both tech giants move to close the gap on Anthropic and OpenAI in one of enterprise software’s fastest-growing segments.

A Market Too Big to Ignore

Research firm Mordor Intelligence projects the AI coding tools market will grow at 26% annually, rising from $9.3 billion this year to roughly $30 billion by 2031. The numbers alone explain the urgency. D.A. Davidson analyst Gil Luria told CNBC it is “absolutely critical” for Microsoft and Google to compete here. Theory Ventures founder Tomasz Tunguz went further, describing AI coding as generative AI’s most attractive market. He estimates the category could eventually account for 30% to 60% of all corporate research and development spending.

Microsoft Takes the Stage at Build

Microsoft CEO Satya Nadella is expected to use this week’s annual Build conference in San Francisco to unveil a new coding model for the company’s Copilot assistant. According to a person familiar with the matter, the offering will be positioned aggressively on price relative to rival products. The company declined to comment to CNBC on the plans.

Google Doubled Down at I/O

Google moved first among the two, making AI coding a centrepiece of its developer conference last month. The company introduced Antigravity 2.0, an agentic system capable of running multiple tasks in parallel. It also launched Gemini 3.5 Flash, which Google described as optimised for agents and coding workloads.

Also Read: Anthropic Closes Funding Round Near $1 Trillion Valuation Ahead of IPO Filing

Anthropic Set the Pace

The competitive scramble traces back to Anthropic’s early bet on developer tooling. Luria told CNBC that while rivals chased consumer-facing image and video features, Anthropic focused on coding as the frontier that would push model performance forward. That thesis paid off. The company closed a financing round last week at a $965 billion valuation, surpassing OpenAI, and on Monday disclosed it had confidentially filed for an IPO. OpenAI has also shifted emphasis, pivoting its Codex product toward enterprise customers to go head-to-head with Anthropic’s Claude Code. Specialist startup Cursor is competing too. In May, Cursor signed a deal granting SpaceX acquisition rights at a $60 billion valuation.

Beyond revenue, Google and Microsoft see coding tools as a gateway to deeper cloud lock-in. Developers who build on their platforms run workloads on their infrastructure, generating training data that makes underlying models more capable over time.

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