Investor Bet: AI Search’s Big Leap From Niche to $20B Reality

Perplexity AI, the rapidly growing artificial intelligence search startup, has reached a $20 billion valuation following a $200 million funding round, according to a report from The Information. This valuation represents a significant jump from its earlier $18 billion valuation in July 2025 and a $9 billion valuation in the first half of the year. The new funding round reflects mounting investor confidence in the company’s innovative AI-powered search model, which offers real-time, cited responses to user queries.

Founded in 2022 by former OpenAI and Google engineers, Perplexity has distinguished itself from traditional search engines by adopting a subscription-based revenue model, eschewing advertisements to deliver ad-free and insightful responses. The company has raised $1.5 billion in total funding since its inception, with the latest round adding to a series of rapid capital injections that highlight the intense competition and demand in the AI space. Notably, the startup is reportedly nearing $200 million in annual recurring revenue, a testament to its growing user base and market traction.

Perplexity’s ambitions extend beyond search, with its AI-powered browser, Comet, designed to perform user tasks autonomously. In an audacious move, the company submitted an unsolicited $34.5 billion offer in August 2025 to acquire Google’s Chrome browser, a move backed by its ambitions to integrate AI directly into the browsing experience. This proposal, though unlikely to succeed, underscores the company’s strategic intent to disrupt the digital ecosystem and compete with major players like OpenAI, which is also developing its own AI browser.

However, the startup’s rapid growth has not been without challenges. Legal and ethical concerns have arisen regarding its content sourcing methods, with some publishers accusing Perplexity of content scraping and plagiarism. These issues have reportedly led to legal threats and have potentially dampened acquisition interest from tech giants like Apple and Meta. In response, the company has piloted revenue-sharing agreements with content providers, aiming to address these tensions while maintaining the quality of its AI-driven summaries.

Looking ahead, the $20 billion valuation positions Perplexity to accelerate product development, particularly in its Pro subscription tier and enterprise tools. The capital infusion is expected to support hiring and infrastructure expansion, essential for handling the computational demands of large language models. This development also reflects broader investor optimism about AI’s transformative potential, even as regulatory scrutiny intensifies. For industry observers, Perplexity’s valuation milestone signals that AI search has transitioned from a niche experiment to a high-stakes competitive field, where billions are at stake.