Snap Shares Surge on $400 Million Perplexity AI Deal
Strategic Partnership with Perplexity AI
Snap Inc. (SNAP) shares surged following the announcement of a landmark $400 million partnership with Perplexity AI, a leading artificial intelligence startup. The deal will see Perplexity’s AI-powered search engine integrated directly into Snapchat, beginning in early 2026. This integration will allow Snapchat’s nearly 1 billion monthly active users to access Perplexity’s conversational AI search through the app’s My AI chatbot, enhancing user experience and discovery.
Financial Details and Revenue Impact
- Perplexity will pay Snap $400 million over one year, combining cash and equity, as the partnership achieves global rollout.
- Revenue from the deal is expected to start contributing in 2026.
- The partnership marks a significant shift in AI integration economics, with Snap being paid for access to its user base rather than paying for AI capabilities.
Market Reaction and Stock Performance
- Snap shares jumped nearly 15% in after-hours trading following the announcement.
- The surge comes after Snap reported better-than-expected Q3 2025 results, with revenue reaching $1.51 billion, up 10% year-over-year.
- The company also announced a buyback program, further boosting investor confidence.
Enhancing Snapchat’s AI Features
- The integration will replace or enhance Snap’s current My AI system, which has been built on technology from OpenAI and Google.
- Snapchat+ subscribers, now numbering over 17 million, will get early access to experimental features, including enhanced AI capabilities powered by Perplexity’s search engine.
- CEO Evan Spiegel emphasized the goal of making AI more personal, social, and fun, woven into the fabric of friendships, Snaps, and conversations.
Perplexity’s Perspective and Strategic Goals
- Perplexity CEO Arvind Srinivas highlighted the opportunity to serve user curiosity directly within Snapchat, leveraging its massive user base.
- The deal gives Perplexity instant access to over 940 million users, potentially multiplying its reach overnight.
- Perplexity’s AI search engine will provide users with conversational answers, enhancing discovery and connection on Snapchat.
Competitive Positioning and Industry Trends
- The partnership validates Snap’s bet on premium AI features and positions the company as a valuable distribution partner for AI startups.
- Perplexity has been aggressively seeking distribution channels to compete with larger players like Google and OpenAI.
- The deal also reflects a broader trend of social platforms monetizing AI integrations and diversifying their AI dependencies.
Future Implications and User Experience
- The integration of Perplexity’s AI search engine is expected to transform the user experience on Snapchat, making it easier for users to ask questions, explore topics, and learn about the world.
- The partnership is seen as a way to make Snapchat the platform where AI companies can connect with its global community.
- Snap’s timing is strategic, as the company continues to grow its user base and expand its premium AI offerings.
External Links
-
Perplexity AI
-
Snapchat
-
OpenAI
-
Google
- The integration of Perplexity’s AI search engine is expected to transform the user experience on Snapchat, making it easier for users to ask questions, explore topics, and learn about the world.
- The integration of Perplexity’s AI search engine is expected to transform the user experience on Snapchat, making it easier for users to ask questions, explore topics, and learn about the world.
