Snowflake Inc. is in talks to acquire startup Reka AI for more than $1 billion, expanding the software maker’s efforts to deliver innovative AI capabilities, according to people familiar with the matter.
Reka AI creates large language models — software trained on large swaths of the Internet that can be used for a variety of tasks, such as captioning images or as a customer-powered chatbot . According to a Reuters report, the startup was founded in 2022 by researchers from Google and Meta Platforms Inc. of Alphabet Inc.. It is valued at about $300 million in a 2023 investment round, including funding from Snowflake’s venture arm.
Snowflake makes tools to organize and analyze data in the cloud and sees synthetic AI, which generates text, voice or images in response to user prompts, as a tool that drives operations your business. It released its own major language model, Arctic, in April. The company also allows customers to use third-party AI models, such as Reka’s, on their data in Snowflake.
The discussions may not lead to a deal, according to the people, who requested anonymity because the talks are private. A Snowflake spokesman declined to comment. Reka could not be reached for comment.
Sridhar Ramaswamy, who had a decade-and-a-half tenure at Google, took over as Snowflake chief executive officer earlier this year. Ramaswamy was Snowflake’s senior vice president of AI before becoming CEO. He joined the company last year when it acquired Neeva, an AI-powered search engine.
Snowflake’s shares are down 17% this year, lagging the iShares Broad Technology-Software Sector ETF, which has gained 3.3%. The company’s revenue growth slowed in 2023 after many businesses cut back on their software purchases. This trend, known as cost optimization, also affects cloud providers such as Amazon.com Inc. and Microsoft Corp.
Tech giants have rushed to partner with or acquire startups operating in the competitive field of innovative AI. Microsoft has sponsored OpenAI efforts and recently hired many Inflection AI employees. Qualcomm Inc. is partnering with semiconductor startup Ampere to develop AI-oriented chips. Salesforce Inc. has invested in many AI startups integrating this technology through customer-facing applications.
Databricks, a startup often considered Snowflake’s main competitor, has also released its own open source large language model and last year acquired AI startup MosaicML for $1.3 billion USD. Databricks was valued at $43 billion in September, compared with Snowflake’s current market value of about $55 billion.
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