Snowflake’s Strategic Acquisition of Observe to Enhance AI Data Cloud Capabilities
In a significant move to bolster its position in the AI-driven enterprise landscape, Snowflake has announced its definitive agreement to acquire Observe, an observability platform renowned for its AI-powered monitoring solutions. This acquisition, pending regulatory approval, marks a pivotal step for Snowflake in expanding its capabilities within the IT operations management software market, which is valued at over $50 billion.
Background on Observe
Founded in 2017 by Jacob Leverich, Jonathan Trevor, and Ang Li, Observe has been at the forefront of observability solutions, enabling companies to monitor their software systems and data for performance issues and bugs. The platform was built on Snowflake’s databases from its inception, launching its first observability product in 2018. Over the years, Observe has secured nearly $500 million in venture capital from prominent firms, including Snowflake Ventures, Sutter Hill Ventures, and Madrona.
Strategic Synergies
The integration of Observe into Snowflake’s AI Data Cloud is poised to offer customers a unified platform for collecting and storing telemetry data—comprising logs, metrics, and traces from software systems. This consolidation aims to enhance the detection and resolution of potential issues within data and software environments. Snowflake CEO Sridhar Ramaswamy emphasized the importance of this integration, stating, By bringing Observe’s capabilities directly into the Snowflake AI Data Cloud, we are empowering our customers to manage enterprise-wide observability across terabytes to petabytes of telemetry with a modern, scalable architecture and AI-powered troubleshooting workflows.
Enhancing AI Monitoring
The acquisition is particularly timely as enterprises increasingly deploy complex AI applications, leading to a surge in telemetry data volumes. Traditional methods often rely on sampling and short retention windows to manage costs, which can impede effective monitoring. The combined capabilities of Snowflake and Observe aim to address these challenges by enabling enterprises to ingest and retain all their telemetry data at a lower cost. This approach facilitates a shift from reactive monitoring to proactive, automated troubleshooting, potentially resolving production issues up to ten times faster than current methods.
Open-Standard Architecture
A notable aspect of this acquisition is the establishment of a unified, open-standard observability architecture based on Apache Iceberg and OpenTelemetry. This framework is designed to handle the massive telemetry volumes required for next-generation AI agents and applications. By leveraging economical object storage, elastic compute, and interoperable standards, enterprises can manage their telemetry data more efficiently and effectively.
Financial Implications
While the exact terms of the deal were not disclosed, reports suggest that the acquisition is valued at approximately $1 billion. This valuation would make it Snowflake’s largest acquisition to date, surpassing its $800 million purchase of Streamlit in March 2022. Observe was most recently valued at $848 million as of July 2025, indicating a significant appreciation in its market value.
Industry Context
This acquisition reflects a broader trend of consolidation within the data industry, as companies strive to build comprehensive product offerings to become attractive one-stop-shop partners in the age of AI. Snowflake has been particularly active in this regard, completing several AI-related acquisitions in 2025, including Crunchy Data, Datavolo, and Select Star, a data governance and metadata management platform.
Leadership Perspectives
Jeremy Burton, CEO of Observe, highlighted the strategic alignment between the two companies, stating, With Snowflake helping us scale, we’ll be able to bring observability to more enterprises worldwide and help them run reliable, high-performing AI applications and agents. This sentiment underscores the shared vision of both organizations to enhance enterprise capabilities in managing complex AI-driven environments.
Conclusion
The acquisition of Observe by Snowflake signifies a strategic enhancement of Snowflake’s AI Data Cloud capabilities, positioning the company to offer more robust observability solutions to its enterprise customers. By integrating Observe’s AI-powered monitoring tools, Snowflake aims to provide a comprehensive platform that addresses the growing demands of AI-driven enterprises, ensuring reliability and performance at scale.
