Perplexity AI Eyes $500M Raise at Jaw-Dropping $14B Valuation

• Perplexity is poised to raise $500 million at a $14 billion valuation, a 50% increase from its $9 billion valuation in November 2024, led by Accel, highlighting investor enthusiasm for AI search startups challenging Alphabet (GOOGL), per The WSJ.
• The company’s AI-powered search tool and upcoming Comet browser aim to disrupt traditional search and browser markets, with Apple (AAPL) noting a decline in Google searches on Safari due to growing use of services like Perplexity, contributing to a 7% drop in Google’s share price.
• Despite legal challenges from Dow Jones and The New York Times over content use, Perplexity faces rising competition from OpenAI’s ChatGPT search and Google’s AI Overviews, with Accel’s Sameer Gandhi set to join its board.

Investor enthusiasm for generative AI continues to drive significant capital into innovative startups, with Perplexity, a San Francisco-based AI-powered search company, in advanced talks to raise $500 million at a $14 billion valuation, a more than 50% increase from its $9 billion valuation in November 2024, according to a Wall Street Journal report. The funding round, led by venture-capital firm Accel, underscores Perplexity’s rapid ascent in the competitive AI landscape, where it challenges Alphabet’s (GOOGL) long-standing dominance in search. Perplexity’s search tool, which delivers summarized answers in sentence form with web citations, contrasts with Google’s traditional link-based results, aligning with a broader shift toward conversational AI interfaces popularized by OpenAI’s ChatGPT, launched three years ago.

Perplexity’s growth trajectory, marked by its fourth funding round last year, reflects the intense interest in AI startups redefining how users access information. The company is also venturing into the browser market with Comet, positioning it as a potential rival to Google Chrome and Apple’s (AAPL) Safari. This move comes as Apple executive Eddie Cue reported a decline in Google searches via Safari over the past two months, the first such drop in over 20 years, attributing it to the rising adoption of generative AI services like Perplexity and ChatGPT. Cue’s comments, made during the penalty phase of the Justice Department’s antitrust lawsuit against Google, revealed Apple’s discussions with Perplexity, OpenAI, and Anthropic to integrate AI search features into Safari, contributing to a more than 7% drop in Google’s share price following the news.

Despite its promise, Perplexity faces challenges, including legal scrutiny from media organizations. The Wall Street Journal’s parent company, Dow Jones, sued Perplexity, and The New York Times issued a “cease and desist” notice in 2024, alleging unauthorized use of their content. To address such concerns, Perplexity introduced a revenue-sharing model in July 2024, allowing publishers to earn a percentage of ad revenue when their articles are cited in answers. Competition is also intensifying, with OpenAI recently expanding ChatGPT’s search capabilities to all users and Google rolling out AI Overviews in May 2024, both aiming to capture the growing demand for AI-driven search. Accel partner Sameer Gandhi’s expected addition to Perplexity’s board signals strong investor confidence, but the company must navigate legal and competitive pressures to sustain its momentum in the rapidly evolving AI search market.

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