Snap Stock Jumps on $400 Million AI Partnership With Perplexity

Snap Inc. shares surged 18% in premarket trading on Thursday, November 6, 2025, following the announcement of a landmark $400 million partnership with AI startup Perplexity. The deal marks the first large-scale integration of an external AI partner directly into Snapchat and represents a strategic move to enhance the platform’s AI capabilities.

Trading at $8.73 in premarket hours as of 8:52 AM EST, the stock jumped from its previous close of $7.30, as investors responded enthusiastically to news that could help Snap compete more effectively with larger rivals like Meta and TikTok in the artificial intelligence race.

Strategic AI Alliance Targets User Growth and New Revenue Streams

Under the agreement, Perplexity will pay Snap $400 million over one year through a combination of cash and equity as the AI-powered answer engine achieves global rollout. Starting in early 2026, Perplexity will appear in Snapchat’s popular Chat interface, allowing the platform’s nearly 1 billion monthly active users to ask questions and receive conversational answers drawn from verifiable sources.

This integration will complement Snap’s existing My AI chatbot, with Perplexity serving as an answer engine that helps users find real-time information from credible sources.

The partnership underscores Snap’s growing role as a trusted platform for AI partners to reach a large, engaged, mobile-native audience. With over 943 million monthly active users and more than 75% of 13-34-year-olds in over 25 countries using Snapchat, the platform offers AI companies a privacy-safe way to reach hundreds of millions of people who already communicate through chat daily.

Revenue from the partnership is expected to begin contributing in 2026, providing a new revenue stream beyond traditional advertising.

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Snap’s AI Push Sparks Investor Optimism Despite Year-to-Date Decline

The market’s enthusiastic response reflects investor confidence that Snap can catch up to larger rivals in artificial intelligence innovation. RBC analysts noted the significance of Snap potentially “delivering something that approaches Meta AI on a relative shoestring budget,” highlighting the cost-effectiveness of partnering rather than building AI capabilities entirely in-house.

The stock’s 18% premarket surge came after shares had already risen 16% in after-hours trading on Wednesday following the announcement.

Snap’s third-quarter results also exceeded expectations, with revenue reaching $1.51 billion, marking a 10% year-over-year increase, and daily active users rising to 477 million. The company forecast fourth-quarter revenue between $1.68 billion and $1.71 billion, compared with analyst estimates of $1.69 billion.

Despite these positive developments, Snap stock remains down 32% year-to-date, trading significantly below its 52-week range of $6.90 to $13.28, suggesting substantial upside potential if the AI partnership delivers on its promise to enhance user engagement and platform competitiveness.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.