Microsoft and Google take on Anthropic and OpenAI in AI coding models

In the booming generative AI market, Anthropic has zoomed ahead of the field, largely thanks to Claude Code, its AI coding assistant. Seeing where the money is, OpenAI shifted much of its focus from the consumer market to enterprise, where its Codex offering is going up against Claude Code.

Now, Google and Microsoft are making a concerted effort to get into the game, using their massive balance sheets and expansive cloud businesses to try and lure developers.

At its developer conference last month, Google placed heavy emphasis on agentic AI, including the unveiling of Antigravity 2.0, which the company said can “orchestrate multiple agents to execute tasks in parallel, such as having one agent code a website while another generates brand assets.” And at the beginning of a blog post announcing Gemini 3.5 Flash, Google said the new model offers “frontier performance for agents and coding.”

Microsoft’s turn on stage comes this week at its annual Build conference in San Francisco. There the company intends to announce a coding model that will be available in Copilot, emphasizing its lower price relative to alternatives, said a person familiar with the plans who asked not to be named in order to discuss internal matters.

The Information reported on the plans last week. Microsoft declined to comment.

With businesses rapidly adopting coding assistants, market research firm Mordor Intelligence predicted that the AI code tools market would expand by 26% a year, from $9.3 billion this year to roughly $30 billion by 2031. The numbers are big, but Google and Microsoft aren’t just looking for new revenue streams. They want developers using their tools, running workloads on their clouds and relying on their models so that the models themselves are able to do more training and get bigger and smarter in the process.

“It’s absolutely critical for these companies to compete in this market,” said Gil Luria, an analyst covering software and other tech stocks at D.A. Davidson.

It’s a sentiment shared by Tomasz Tunguz, founder of Theory Ventures, who described AI coding as the most attractive market for generative AI models. He estimates that AI might eventually represent 30% to 60% of research and development spending.

In addition to Anthropic and OpenAI, companies like Cursor have specifically targeted the coding opportunity. In May, Cursor signed an agreement with SpaceX that gives Elon Musk’s company the right to acquire the startup for $60 billion.

The tools have become so powerful that Wall Street started bailing on software stocks — though the beaten-down sector rebounded in May — on concern that entire companies could be wiped out because their products could be vibe coded. Anthropic on Thursday announced the closing of a financing round at a $965 billion valuation, surpassing OpenAI, and said on…