Artificial intelligence startup Magic has announced the completion of a $320 million funding round, co-invested by former Google CEO Eric Schmidt, Alphabet's CapitalG, Atlassian, and several other investors. This round brings the company's total funding to nearly $500 million, placing it among the well-funded AI coding startups.
Magic focuses on developing AI models that generate code and automate software development tasks. In a blog post, the company revealed that the funds will be used to collaborate with Google Cloud to build two supercomputers—Magic-G4 and Magic-G5—on its platform. Magic-G4 will be composed of Nvidia H100 GPUs, while Magic-G5 is planned to use Nvidia's next-generation Blackwell chips. These supercomputers will significantly enhance the training and inference efficiency of Magic's models and are expected to scale up to tens of thousands of GPUs, achieving a computing power of 160 exaflops.
Magic was co-founded by Eric Steinberger and Sebastian Dro in 2022 with the aim of assisting software engineers in writing, reviewing, debugging, and planning code. Unlike other AI tools, Magic's innovation lies in its models' exceptionally long context windows, with the latest model LTM-2-mini boasting a context window of 100 million tokens, the largest in commercial models. This allows Magic's models to handle more complex and large-scale coding tasks, surpassing the capabilities of traditional AI coding tools.
Despite its small team, Magic is accelerating its expansion with the goal of developing artificial general intelligence (AGI) that is more reliable than humans. To this end, Magic has hired Ben Chess, former head of the OpenAI supercomputing team, and plans to further expand its cybersecurity, engineering, and research teams.
As the market demand for AI-assisted coding tools grows, Magic's development prospects are attracting significant investor attention. According to estimates by Polaris Research, the market Magic aims for could be worth $27.17 billion by 2032. Despite facing challenges related to security and copyright issues, Magic's innovative technology and ambitious vision set it apart in the competitive AI industry.