Perplexity’s $14 Billion Valuation Ignites Google Search Engine Shakeup – Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)

Artificial intelligence has captured the imagination of virtually every company in the tech world as the technology rapidly becomes more powerful. Perplexity, an AI startup and a potential threat to Alphabet Inc‘s GOOG GOOGL Google, was valued at $14 billion in its latest funding round.

What Happened: The company is in advanced talks with venture-capital firm Accel for a $500 million funding round that places the San Francisco-based company among the most valuable AI startups, according to The Wall Street Journal.

The company was valued at $9 billion in November 2024, representing an over 50% increase in valuation in the past six months. However, the $14 billion figure falls under the start-up’s desired $18 billion valuation in March, according to CNBC’s Hayden Field.

Jeff Bezos and Japan’s SoftBank Group are among Perplexity’s past investors, according to Reuters.

Why it Matters: Perplexity is a search engine that delivers answers to any question by searching the web and compiling information from multiple sources. Unlike traditional search engines, it provides inline citations, allowing users to verify facts easily. Despite some enthusiasm, Perplexity faces many hurdles, including high infrastructure costs and concerns over the legality of its content.

Several reports have likened Perplexity to a rival of Google as the latter experiences stagnant search query growth. While the Mountain View, California-based company still maintains a dominant industry position with its search business, its market share sits at its lowest in decades.

OpenAI was valued at $300 billion in an April funding round. Elon Musk‘s xAI, another tech industry newcomer, was valued at $80 billion in March.

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Image created using artificial intelligence via Midjourney.