Elon Musk’s AI Startup Acquisition Fails to Land as Cognition Rebuffs SpaceX Buyout

SpaceX’s attempt to acquire artificial intelligence coding startup Cognition AI Inc. stalled without a deal, according to people familiar with the matter. The approach would have been SpaceX’s second major AI takeover in recent months.

The deal talks are no longer active, but the two companies continue discussing a compute partnership instead, letting Cognition use SpaceX’s computing capacity, the people said.

Independence Over a Buyout

Cognition, founded in 2023, builds Devin, an AI agent designed to automate programming tasks for software engineers. The startup was valued at $26 billion in a May funding round. It has since opened early talks for fresh financing at a valuation of at least $40 billion, a trajectory that gives it less reason to sell.

Cognition Chief Executive Officer Scott Wu has been consistent on the matter, both publicly and in conversations with investors. He told Bloomberg in May that the company’s funding round

“allows us to stay independent and continue as an independent business, which is really important for us.”

SpaceX has managed to rebound from its recent lows. Image Source: Trading View

A Different Outcome Than Cursor

The stalled approach stands in contrast to SpaceX’s $60 billion Cursor acquisition, which closed on August 14 and gave Musk’s rocket firm a rival AI coding platform outright. SpaceX’s AI venture, now called SpaceXAI, has lagged competitors in selling AI tools to businesses. It has also cut jobs while restructuring around the effort.

Cognition’s partnerships with Mercedes-Benz Group AG and GE Aerospace add business weight SpaceXAI wanted, even without a takeover, the people said. Musk’s SpaceX stock market debut this summer gave the company capital to chase such deals. Whether a revised offer emerges may depend on how Cognition’s next funding round reshapes its price tag.

SpaceX Stock Swings Ahead of Share Unlock

SpaceX shares have been volatile since the June initial public offering (IPO). The stock closed as low as $108.27 in early August before rebounding above its $135 offering price.

Shares traded at around $139, ahead of a share unlock, which frees previously restricted insider shares for sale, covering about 319 million shares. The rebound followed stronger-than-expected second-quarter revenue of $7.8 billion, and Nvidia’s disclosed $21 billion stake in the company added to investor interest.

Musk’s SpaceX stock market debut gave the company capital to chase AI deals like the one it explored with Cognition. Whether a revised offer emerges may depend on how Cognition’s next funding round reshapes its price tag.