Cognition receives a valuation offer of up to $80 billion, yet its annualized revenue is only about a quarter of Cursor's.

Beating AI News Flash: AI programming company Cognition has received a new round of financing offers, with investors valuing it at as much as $70 billion to $80 billion, even exceeding the implied equity valuation of $60 billion when SpaceX acquired Cursor.

On September 8, Cognition had just raised more than $2 billion at a valuation of $48 billion. In just seven weeks, the highest offer has risen by another 67%. The company is considering another funding round before the end of the year, but nothing has been finalized.

Cognition's core product, Devin, has evolved from assisting with coding to autonomously executing software engineering tasks. After acquiring Windsurf last year, it also filled out its AI code editor and enterprise sales channels. At the time of the acquisition, Windsurf already had more than 350 enterprise customers. Cognition's annualized revenue grew from $492 million in May this year to more than $1 billion in September. Its customers include Nvidia, Citi, and Mercedes-Benz.

But compared with Cursor, the valuation is still expensive. Cursor's annualized revenue had already reached about $4 billion in June, nearly four times that of Cognition. Now Cognition's offer is even higher. Based on a rough calculation of $1 billion in annualized revenue, the valuation is already equivalent to 70 to 80 times revenue.

Moreover, after being acquired by SpaceX, Cursor can use the latter's GPU clusters; Cognition, by contrast, spends hundreds of millions of dollars each year renting Nvidia servers and also has to train its own programming model based on open-source models, with cash burn potentially reaching as high as $800 million this year.

People familiar with the matter said that excluding investment in its own model, Cognition's free cash flow is already close to break-even. Yet that investment is precisely its way of trying to reduce reliance on OpenAI and Anthropic models.