Snowflake in Negotiations to Acquire Reka AI for $1 Billion
People familiar with the matter say that snowflake Inc. is in talks to buy startup Reka AI for more than $1 billion. This would extend the software company’s efforts to offer generative AI features.
Reka AI creates large language models, which are pieces of software that have been trained on huge parts of the internet and can be used for many things, like assigning captions to pictures or acting as chatbots that help customers. Google researchers and Meta Platforms Inc. employees started the company in 2022. A 2023 investment round that included money from Snowflake’s venture arm valued it at about $300 million, according to Reuters.
Snowflake’s Strategic AI Integration
Snowflake creates tools to effectively manage and examine data stored in the cloud. The company believes that generative AI, which creates text, voice, or images in response to user input, will greatly assist its growth. The company’s own big language model, Arctic, came out in April. Additionally, customers can use AI models from outside the company, like those from Reka, on their Snowflake data.
A deal might not come out of the talks, said the people who didn’t want to be named because the talks are private. A Snowflake representative refused to say anything. You tried to get in touch with Reka but couldn’t.
Sridhar Ramaswamy, who worked at Google for eleven and a half years, became CEO of Snowflake earlier this year. He was senior vice president of AI at Snowflake before becoming CEO. He began working for the company when it bought Neeva, a search engine powered by AI, last year.
Current Market Dynamics and Competition
This year, Snowflake shares have gone down 17%, while the iShares Expanded Tech-Software Sector ETF has gone up 3.3%. The company’s sales growth slowed down in 2023 because many companies bought less software. Cost optimisation was the name of this trend that also affected cloud service providers such as Microsoft Corp. and Amazon.com Inc.
Tech giants are rushing to work with or buy up startups in the competitive field of generative AI. Microsoft has helped fund OpenAI’s work and just hired a lot of Inflection AI’s staff. Qualcomm Inc. and Ampere, a new semiconductor company, are working together on chips that will help AI. Salesforce Inc. has put money into a number of AI startups as it builds the technology into its customer-focused apps.
Although Databricks is generally seen as Snowflake’s main competitor, it has also made its own large language model available to everyone and bought AI startup MosaicML for $1.3 billion last year. That’s a $43 billion difference between Databricks and Snowflake’s current market value of $55 billion.
