AI search engine start-up Perplexity has soared to a valuation of $18 billion, just two months after closing a funding round that had valued the company at $14 billion. The leap reflects surging investor interest in generative AI tools that promise to challenge the dominance of Big Tech incumbents.

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Founded just three years ago, Perplexity has now raised capital five times in the past 18 months, growing from a modest $500 million valuation at the start of 2024 to one of the most closely watched companies in the sector. The latest bump in value came after new investors approached the company post-funding round and were invited to buy in at the higher price tag, according to people familiar with the discussions.

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Perplexity has positioned itself as a credible alternative to Google in the search space, offering a streamlined AI-native search experience. Unlike traditional search engines, it focuses on providing direct answers rather than lists of links, while pulling in context to generate results that aim to be more useful and conversational.

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Its ambitions go further. Last week, the company launched Comet, an AI-powered web browser for premium subscribers. The tool integrates voice and text commands, allowing users to carry out tasks such as shopping, reading and summarising social media, or sending emails — all through a single interface. CEO Aravind Srinivas has described Comet as a key step towards creating AI “agents” that don’t just answer questions but take action on behalf of the user.

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Speaking to the Financial Times earlier this year, Srinivas framed the company’s mission as building tools that bring together reasoning, summarisation and context in a seamless user experience. “If you can do those two things reliably at scale,” he said, “then you stand to win big time in the AI race.”

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That race is intensifying. Perplexity faces growing competition from other AI-first challengers like Anthropic and OpenAI, as well as pressure from legacy players like Google, Apple and Meta. Several of these companies have made high-profile moves in recent months — from Google’s $2.4bn acquisition of Windsurf talent, to Meta’s $15bn investment in Scale AI.

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Despite persistent rumours of a takeover, Srinivas has repeatedly stated his desire to take Perplexity public. Still, the company has attracted backing from some of the sector’s heaviest hitters, including Nvidia, SoftBank’s Vision Fund 2, New Enterprise Associates, IVP, and even Amazon’s Jeff Bezos and Meta’s chief AI scientist Yann LeCun.

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Perplexity’s financials are also gaining traction. Its annualised revenues — based on recent monthly performance — have reportedly climbed from $35 million in August 2024 to $150 million as of this month. The company has monetised its user base of around 30 million through a mix of subscriptions, advertising and ecommerce — a model that rivals like OpenAI and Google have only recently begun to emulate.

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Subscription plans range from $20 to $200 per month depending on usage and features, reflecting Perplexity’s tilt towards professional users who value speed, context and interactivity. The company’s shift into ecommerce and advertising has also opened up new commercial pathways not traditionally associated with search engines or chatbots.

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While Perplexity is still a fraction of Google’s scale, its momentum — and investor backing — suggests that it is no longer just another AI experiment. Instead, it is emerging as one of the few credible challengers in a market that remains dominated by incumbents but is increasingly open to disruption.

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For now, Perplexity declined to comment on its latest valuation. But the message to the market is clear: in the age of AI-native search, the race for relevance is only just beginning.

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