ANALYSIS SpaceX's reported attempt to acquire Cognition AI — and the startup's swift, public rejection — suggests that Musk's strategy of assembling an AI empire through aggressive M&A faces resistance in a market where the most valuable coding-AI companies are raising capital at escalating valuations. Days after closing a $60 billion deal for Cursor, SpaceX's pursuit of a second major AI coding startup signals both the urgency of Musk's AI ambitions and the structural difficulty of consolidating a sector where startups can credibly choose independence.
Why it matters
AI-assisted coding has become the clearest monetization path in the current AI cycle5. SpaceX, which absorbed Musk's xAI earlier this year and went public in a blockbuster June IPO with a market capitalization that rose to nearly $2.3 trillion at its peak, has told investors that AI will eventually dominate its value4. Musk told SpaceX employees last week that "in about four or five years, AI will be 99% of the value" of the company, but achieving that "will require SpaceX to pull in much more revenue from AI". ◆ The Cognition approach — and its failure — tests whether SpaceX can execute on that promise through acquisitions alone.
The big picture
Bloomberg reported, citing people familiar with the matter, that SpaceX approached Cognition AI about a potential acquisition1. Cognition CEO Scott Wu publicly disputed the report shortly after it published, writing on X that the story was inaccurate, that Cognition is not for sale, and that the two companies haven't been in talks. The deal talks are now described as inactive, though the companies are still discussing potential collaboration, including Cognition possibly using SpaceX's computing infrastructure3.
The approach came days after SpaceX closed its $60 billion acquisition of Cursor, another AI coding startup. Cognition's flagship product is Devin, an autonomous AI software engineer used by enterprise clients including Mercedes-Benz and GE Aerospace. The startup was valued at $26 billion in a May funding round where it raised $1 billion, and is now in early talks for new funding at a valuation of at least $40 billion.
ANALYSIS The velocity of these numbers — from $26 billion in May to at least $40 billion in the current round — illustrates why Wu can credibly refuse a suitor, even one backed by a $2.3 trillion parent. After raising $1 billion in May, Wu said the financing "enables Cognition to remain independent and continue operating as an independent company".
Between the lines
SpaceX's AI unit, built on the xAI acquisition, remains "relatively early-stage and has fallen behind competitors" like OpenAI, Anthropic, and Google. It has also had to contend with its chatbot Grok's "penchant for controversy, including last year's MechaHitler incident and this year's nonconsensual sexual imagery scandals, as it tries to win over enterprise customers". ◆ That enterprise credibility gap makes acquiring a company like Cognition — which already has blue-chip clients — strategically attractive but also harder to close, because the target has less incentive to trade its brand for SpaceX's.
The broader AI coding landscape is consolidating rapidly. Cognition itself acquired the remaining assets of competitor Windsurf last year. After the merger, Cognition laid off 30 employees and offered buyouts to the remaining 200 Windsurf employees. ◆ Major AI platform players are racing to lock up coding-agent talent and technology, whether through full acquisitions or billion-dollar funding rounds that function as retention mechanisms.
The fact that SpaceX and Cognition are still discussing collaboration around SpaceX's computing capacity suggests a fallback playbook. ◆ For SpaceX, which has pitched investors on eventually building data centers in space, offering compute to an independent Cognition may be the next-best outcome: a commercial relationship that feeds SpaceX's AI revenue line without requiring a takeover.
What's next
Cognition's forthcoming funding round, targeting at least $40 billion, will be the immediate test of whether independence holds. ◆ A successful raise at that valuation would further widen the gap between what Cognition believes it is worth and what any acquirer — SpaceX included — might be willing to pay, effectively pricing the company out of the M&A market for now. Meanwhile, SpaceX's Grok 4.6 has scored higher on benchmarks for coding and complex multi-step agentic tasks, suggesting the company is also investing in building, not just buying, its way into the coding-AI race. Whether SpaceX's AI ambitions ultimately rest on internal development, further acquisitions, or infrastructure partnerships like the one being discussed with Cognition will shape the competitive structure of the AI coding market.