Snap Stock Surges 18% Following $400 Million Deal with Perplexity AI
In Focus
- Snapchat signed a $400 million deal with Perplexity AI
- The deal pushed Snap stock up 18%
- Perplexity AI’s chatbot will be integrated into Snapchat
Snap stock surged 18% in premarket trading on November 6, 2025, following a $400 million deal with AI startup Perplexity AI. According to Reuters, the partnership between Snapchat and Perplexity signaled to Wall Street that the social media firm could catch up with competitors in the global AI race.
Integration of Perplexity AI’s Chatbot into Snapchat
As part of Snapchat’s AI strategy, Perplexity’s AI-powered search engine will be integrated into the social platform. This will enable Snapchat to compete with global competitors like Meta and TikTok.
Snapchat already made its first image generation tool, Open Prompt AI Lens, accessible to users in the U.S. for free. However, large competitors like Meta Platforms have already introduced a range of AI features on social media platforms like WhatsApp, Instagram, and Facebook.
“Compute cost implications over time are unclear, but it’s wild to think about Snap actually delivering something that approaches Meta AI on a relative shoestring budget,” RBC analysts said.
Last month, Meta added text-prompt AI editing to photo and video editing tools within Instagram Stories.
Perplexity Chatbot to Control Queries on Snapchat
According to Snap CEO Evan Spiegel, Perplexity AI’s chatbot will boost Snap’s generative AI features by controlling user query responses.
The responses will not feature advertisements. Perplexity’s AI search engine will be available on Snapchat starting in early 2026. The AI-powered tool will replace the chat inbox on the social media platform.
Snapchat said its My AI chatbot feature will still be accessible to users, and they’ll have a choice to use both tools. The social media platform said Snapchat’s $400 million AI deal with Perplexity marks the start of a broader plan to open the company up to more AI partnerships.
“We certainly see a lot of opportunity to open up Snapchat to more AI partners over time. The conversational interface has become a lot more valuable with the advent of conversational AI,” Spiegel said.
Quick Summary of the Snapchat Perplexity Partnership
- Perplexity AI’s chatbot will control query responses on Snapchat
- Snapchat users will access the chatbot starting 2026
- AI startup will pay Snap $400 million over the one-year period
The Revenue Aspect of the Deal
Snap expects revenue from the deal to start reflecting next year. Perplexity AI will pay the social media company $400 million over the one year period.
Payment will be in the form of equity and cash. Snap’s third-quarter revenue surpassed analyst expectations. The company forecasted fourth-quarter revenue in the range of $1.68 billion to $1.71 billion, which is within analyst projections of $1.69 billion.
Snap’s Q3 report came on the backdrop of upbeat quarterly earnings from tech giants Alphabet, Meta, and Reddit. Prior to November 5, 2025, shares of the social media platform had dipped 32% since the beginning of 2025.
