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Cognition Labs: Chasing a $2 Billion AI Valuation

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Artificial intelligence is set to change our world in many ways, but right now, there’s talk of an AI bubble.

Cognition Labs, a startup founded in November, is making waves by aiming for a massive $2 billion valuation, according to a report from the Wall Street Journal.

Their flagship product, Devin, claims to be the “first fully autonomous AI software engineer.” Despite generating no real revenue yet, Devin was launched just this month.

Cognition Labs: Chasing a $2 Billion AI Valuation

Earlier this year, Cognition Labs raised $21 million, valuing the company at $350 million. They even turned down offers valuing them at $1 billion. Now, they’re in discussions with investors for a potential deal that could value them at up to $2 billion.

This huge valuation isn’t unique in today’s AI scene. Perplexity, a rival AI search startup, recently secured funding valuing it at $1 billion, while Mistral, a French AI startup, reached a $2 billion valuation in December.

But with these sky-high valuations comes skepticism. Some observers, like Albert Edwards from Société Générale, worry about a bubble forming. He points out that every bubble has a convincing story, and the current one revolves around the promise of AI driving massive profits for companies.

Venture capitalist David Sacks acknowledges the potential of ventures like Devin but warns about the challenges they face, particularly in existing code bases. Still, he notes that Devin’s strong demos might impress investors.

The question remains: Will these impressive demos lead to successful companies in the long run? Only time will tell. But one thing’s for sure: Today’s eye-popping valuations for unproven startups will be remembered, whether they succeed or not.

Source: Fortune