SpaceX's attempt to acquire AI coding startup Cognition AI Inc. has stalled without a deal, and the two companies are now discussing a compute partnership that would let Cognition use SpaceX's computing capacity. The pivot ends months of acquisition talks that had put the Elon Musk-led company in pursuit of one of the most richly valued AI startups in the sector.
Why the deal fell apart
Cognition, founded in 2023 and the maker of Devin, an AI agent that automates programming tasks, was valued at $26 billion in a May funding round. The company has since opened early talks for fresh financing at a valuation of at least $40 billion, according to people familiar with the matter. That steep jump in expectations likely complicated SpaceX's bid.
Cognition CEO Scott Wu has emphasized the company's independence, both publicly and privately. That stance runs counter to an outright acquisition, and sources say Wu's preference for remaining standalone was a key factor in the talks stalling. SpaceX, for its part, was not willing to meet the valuation threshold Cognition sought in an acquisition scenario.
SpaceX's rival AI bet
SpaceX's $60 billion acquisition of Cursor closed on August 14, giving it a competing AI coding platform outright. That deal, announced earlier this year, was meant to jumpstart SpaceX's AI ambitions. But its AI venture, now called SpaceXAI, has lagged behind rivals in selling AI tools to businesses and has cut jobs while restructuring.
The compute partnership with Cognition would give SpaceXAI access to a cutting-edge coding agent without a full acquisition. For Cognition, the arrangement secures the massive computing resources needed to train and run Devin, a resource-hungry AI model. Cognition's existing partnerships with Mercedes-Benz Group AG and GE Aerospace add business weight that SpaceXAI wanted.
Market backdrop and the share unlock
SpaceX's stock market debut this summer gave the company capital to chase AI deals. Shares have been volatile since the June IPO, closing as low as $108.27 in early August before rebounding above the $135 offering price, trading around $139. The rebound followed stronger-than-expected second-quarter revenue of $7.8 billion.
Investor interest got another boost when Nvidia disclosed a $21 billion stake in SpaceX, a signal that the chipmaker sees strategic value in the company's AI push. But a share unlock covering about 319 million shares is expected, freeing previously restricted insider shares for sale. That overhang could test the stock's recent strength.
For now, the compute partnership is in discussion, with no deal finalized. The next milestone for SpaceX will be the share unlock, which could reshape the shareholder base just as the company recalibrates its AI strategy.
