Magic, a U.S. startup specializing in generative AI-powered coding tools, is in talks to raise over $200 million in funding, aiming for a $1.5 billion valuation, following its previous successful rounds. Investors like Jane Street are expected to participate in the funding, highlighting the allure of AI technologies in software development despite Magic's lack of revenue or a product for sale. This trend mirrors the success seen in other AI coding assistants like GitHub Copilot, indicating a growing market demand for such tools. Magic's innovative approach involves automatically building entire applications based on natural language input from developers, showcasing the expanding potential of generative AI in coding solutions.