Anysphere, the developer of AI-powered coding assistant Cursor, is in talks with venture capitalists to raise capital at a staggering valuation of nearly $10 billion, according to a Bloomberg report. This potential funding round comes just three months after Anysphere completed its previous fundraise of $100 million at a pre-money valuation of $2.5 billion, as first reported by TechCrunch.

The new round, expected to be led by returning investor Thrive Capital, underscores the explosive interest in AI-coding assistants. Anysphere's previous valuation was already impressive, with investors willing to value the company at 25 times its $100 million annualized recurring revenue (ARR). However, the new deal would be a whopping 66 times ARR, given the company's current ARR is estimated to have climbed to $150 million, as reported by The Information.

Anysphere is not the only company benefiting from this investor frenzy. Codeium, the company behind AI coding editor Windsurf, is also raising capital at a valuation of nearly $3 billion, as reported by TechCrunch last month. Kleiner Perkins, leading the round into Codeium, valued the company at about 70 times ARR of about $40 million. These valuations signal a significant shift in investor sentiment, with AI-powered coding tools being viewed as a high-growth area.

The rapid adoption of AI in coding tools is outpacing its use in other sectors, such as sales, law, healthcare, and more, according to investors. This is likely driven by the potential for AI to revolutionize the coding process, increasing efficiency and productivity for developers. As a result, investors are eager to back companies that are pushing the boundaries of AI-powered coding.

In addition to Anysphere and Codeium, other AI-powered coding companies are also attracting investor attention. Poolside, another company developing its own large language model (LLM), has been approached by investors in recent weeks, sources tell TechCrunch and The Information. While Poolside did not immediately respond to a request for comment, the interest in the company highlights the broader trend of investors seeking out opportunities in AI-powered coding.

The surge in valuations and funding for AI-coding assistants raises questions about the long-term sustainability of these investments. However, for now, investors are betting big on the potential of AI to transform the coding landscape. As the market continues to evolve, it will be worth watching how these companies deploy their newfound capital and whether they can deliver on the promise of AI-powered coding.

The implications of this trend extend beyond the companies themselves, with potential ripple effects on the broader tech industry. As AI-powered coding tools become more prevalent, they may disrupt traditional coding practices and create new opportunities for innovation. The explosion of interest in AI-coding assistants is a clear indication that investors believe this technology has the potential to drive significant growth and change in the years to come.