Snap strikes $400 million deal with perplexity AI – shares surge 18%

U.S. social media company Snap Inc., the parent of Snapchat, has announced a $400 million partnership with AI startup Perplexity AI, sending its shares up 18% in premarket trading – the company’s biggest single-day jump in nearly two years.

Under the deal, Perplexity’s AI-powered search engine – a rival to ChatGPT – will be integrated into Snapchat, adding advanced chatbot and smart search features. The startup will pay Snap $400 million over one year, in a mix of cash and equity. The company emphasized that user data will not be used for advertising purposes.

The integration aims to help Snap catch up with AI-driven rivals like Meta and TikTok, which have rapidly advanced their artificial intelligence capabilities. RBC analysts said the move shows “Snap trying to deliver something close to Meta AI – but on a relative shoestring budget.”

Revenue from the partnership is expected to start appearing in 2026, but the announcement has already revived investor optimism after Snap’s stock lost 32% this year. Analysts see the deal as a potential turning point for the company’s comeback in the competitive digital advertising market.