According to Forbes, Snap shares surged 16% in premarket trading after announcing a partnership with Perplexity AI and a $500 million stock buyback plan. The company reported Q3 2025 revenue of $1.51 billion, beating analyst estimates of $1.49 billion and representing 10% year-over-year growth. Daily active users grew to 477 million, up 8% from last year, while monthly users reached 943 million, a 7% increase. CEO Evan Spiegel revealed that Perplexity will control its chatbot responses within Snapchat and receive “default placement in our chat inbox,” with Snap not selling advertising against Perplexity’s AI responses. The deal comes nearly two years after Snap launched its My AI chatbot, which originally used OpenAI’s GPT models and later integrated Google’s Gemini AI.
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Snap’s AI Strategy Shift
Here’s the thing about Snap’s latest move: they’re basically admitting that building their own AI wasn’t enough. They started with My AI powered by OpenAI and Google, but now they’re bringing in Perplexity as essentially a premium search alternative. And giving them default placement? That’s huge real estate. It tells me Snap recognizes that specialized AI players might actually deliver better user experiences than their own in-house solutions.
The Business Model Play
What’s really interesting is how Snap isn’t taking advertising revenue from Perplexity’s responses. So why do it? I think they’re betting on the partnership driving user engagement and potentially helping Perplexity convert Snapchat users to paid subscribers. If Perplexity succeeds, Snap likely gets a cut or at least benefits from keeping users in their ecosystem longer. It’s a clever way to monetize AI without the traditional ad model that everyone’s getting tired of.
Broader Implications
This deal signals something bigger happening across social media platforms. We’re moving from “build everything ourselves” to “partner with the best specialists.” Snap’s basically saying: look, we can’t be experts at everything, so let’s bring in the companies that are actually good at specific AI tasks. And giving Perplexity that prime placement suggests they see real value in conversational search as a core feature, not just an add-on. Could this become the new normal? Where social platforms become aggregators of multiple AI services rather than trying to build them all internally?
The Numbers Tell The Story
Let’s not forget those user numbers – 477 million daily active users is nothing to sneeze at. That’s a massive potential audience for Perplexity to tap into. And with time spent watching content increasing, Snap’s creating an environment where AI-powered search could naturally fit into how people already use the app. The $500 million buyback shows confidence, but I wonder: is this the beginning of a broader AI partnership strategy, or just a one-off experiment? Only time will tell, but for now, investors are clearly liking what they see.
