Snap Introduces Perplexity AI with $400M Deal to Revolutionize Snapchat’s Core Chat Experience

• Snap Inc. has inked a $400 million deal with Perplexity AI to integrate an advanced, conversational AI search engine directly into the Snapchat app starting in early 2026.
• The announcement, coupled with better-than-expected third-quarter earnings, sent Snap’s shares soaring by approximately 17%, reflecting strong investor confidence in the AI strategy.
• This feature will allow users to ask complex questions and receive real-time, fact-based, and sourced answers within the chat interface, moving beyond traditional search and challenging rivals like TikTok and Meta.

Snapchat is preparing for a major artificial intelligence upgrade that could fundamentally change how its nearly one billion global users discover and interact with information on the platform.

In a landmark move, Snap Inc., the parent company of Snapchat, has entered a $400 million cash-and-equity partnership with Perplexity AI, the rapidly rising search and answer engine known for its conversational and source-cited approach to knowledge discovery, Business Insider reported.

The Strategic Value of Conversational Search

The integration of Perplexity’s AI “answer engine” is Snap’s clearest signal yet that it views conversational artificial intelligence as the future of discovery. Unlike traditional search engines, which return a list of links, Perplexity uses sophisticated Large Language Models (LLMs) to synthesize information from multiple credible sources on the web, delivering a clear, concise, and source-cited answer directly to the user.

Snapchat CEO Evan Spiegel framed the collaboration as a step toward making AI “more personal, social and fun—woven into the fabric of your friendships, Snaps, and conversations.” Essentially, users will soon be able to talk to an AI that acts like a highly knowledgeable friend. This approach aligns perfectly with Snapchat’s identity as a chat-first platform and aims to increase user engagement by making information gathering effortless and seamless.

A New Revenue Stream and Financial Confidence

The financial details of the partnership are particularly noteworthy. Perplexity AI will pay Snap $400 millionover one year in a mix of cash and equity, with the revenue contributions expected to begin in 2026. This arrangement provides Snap with a substantial new revenue stream that is distinct from its core advertising business.

The announcement came on the heels of strong financial results for Snap’s third quarter, where the company reported a 10% rise in revenue and an increase in daily active users to 477 million. The dual news, solid earnings and the transformative AI deal, spurred a massive surge in investor confidence. Snap’s shares climbed roughly 17% in after-hours trading, underscoring Wall Street’s belief that the strategic AI move, alongside improved advertising performance, positions the company for stronger growth against powerful competitors.

Positioning Against the Social Media Giants

Snap’s investment in advanced conversational search is a strategic response to the competitive pressure from rivals like TikTok and Meta-owned Instagram and Facebook. While those platforms dominate in certain aspects of the digital advertising market, Perplexity offers Snapchat a distinct advantage in the realm of factual, utility-focused AI.

The Perplexity integration will complement Snapchat’s existing chatbot, “My AI,” which already uses models from providers like OpenAI and Google. The new feature, however, focuses on real-time, verifiable answers, appealing to a generation of mobile-native users who value speed and context. 

As Max Willens, a principal analyst at Emarketer, noted, “Perplexity needs a way to build its profile among young consumers, and Snap needs an AI chat partner that will allow its users to stay engaged without leaving its app,” as mentioned in a report by The Times of India. The deal is thus mutually beneficial, expanding Perplexity’s reach to a vast, young audience and enhancing Snapchat’s utility and stickiness.

The Future of Discovery on Snapchat

The integration is a major first step in Snap’s broader vision to position itself as a trusted platform where leading AI companies can connect with its global community. Snap has also teased other AI-powered updates, including an AI video generation feature called “AI Clips,” designed to help creators generate short, shareable videos from simple prompts.

The ultimate success of the Perplexity deal will hinge on execution. The new AI search tool must not only deliver accurate answers but also integrate seamlessly into the highly visual, fast-paced nature of the Snapchat experience.