Snapchat’s Conversational AI Launch Sends Stock Skyrocketing – Here’s Why

Snapchat just dropped a bombshell—and Wall Street is scrambling to buy the dip before it's too late.

The social media giant unveiled its long-rumored conversational AI feature today, triggering a double-digit stock surge that left analysts breathless. Forget filters—this is Snap's play for the messaging wars.

From selfie app to AI powerhouse

Insiders whisper the new chatbot leverages bleeding-edge NLP models, though Snap's engineers won't confirm whose tech is under the hood. Early testers report eerily human-like exchanges—with just enough Gen-Z snark to feel authentic.

Traders chase the hype train

The market's reaction proves investors still fall for 'AI' buzzwords like clockwork. Never mind that Snap's last moonshot (remember Spectacles?) became a warehouse full of unsold inventory. This time will be different—until the next earnings call, at least.

One thing's certain: if the AI can actually boost engagement, Snap might finally justify its valuation. If not? There's always another buzzword to pump the stock.

Key Takeaways

• Snap reported strong results and guidance as its user base and revenue grew.
• The social media company also signed a $400 million partnership with Perplexity to offer Snapchat users a conversational AI-powered search option.

Snap shares soared some 12% on Thursday after the owner of the Snapchat social media platform posted better-than-expected results and guidance on user growth and spending.

The company also approved a stock buyback and struck a deal to provide conversational artificial intelligence (AI) search to Snapchat.

The latter bit of news is likely a big reason for the lift in the shares today. Snap (SNAP) said it is partnering with AI-powered answering engine Perplexity to give Snapchat users “a new way to ask questions, explore topics they care about, and learn about the world,” saying Perplexity’s system WOULD be integrated into Snapchat beginning early next year.

Snap said the integration of Perplexity “marks a first step in Snap’s effort to make Snapchat a platform where leading AI companies can connect with its global community in creative and trusted ways.” Perplexity will pay $400 million in a combination of cash and equity over one year, Snap said.

Why This Matters to Investors

Snap's efforts to boost growth are on display with its latest quarterly results and Perplexity deal. Investor reaction indicates a reward for the social-media company's effort to integrate the services AI startups provide into its offerings.

Snap posted a third-quarter loss of 6 cents per share, better than the 12 cents per share loss analysts surveyed by Visible Alpha were looking for. Revenue increased 10% to $1.51 billion, also above forecasts. The company’s average daily active users grew 8% to 477 million, and average revenue per user was up 2% to $3.16. Ad revenue was 5% higher to $1.32 billion. All those topped estimates as well.

The company sees current-quarter revenue in the range of $1.68 billion to $1.71 billion, while the Visible Alpha prediction is $1.69 billion.

Snap said its board has authorized a buyback plan of up to half a billion dollars, the goal of which is to offset some of the dilution associated with its compensation practices.

Shares of Snap have mostly traded in negative territory throughout 2025, and despite today’s gains, they remain down 20% for the year.

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