Snowflake has signed an agreement to acquire observability startup Observe, moving to fold AI-driven telemetry analysis directly into its AI Data Cloud as enterprises grapple with the operational complexity created by large-scale AI systems.
Financial terms were not disclosed, though multiple reports estimate the transaction at roughly $1 billion, which would make it the largest acquisition in Snowflake’s history. The deal is subject to regulatory approval.
Observe will be integrated directly into the Snowflake platform, giving customers a unified environment for collecting, storing, and analyzing telemetry data such as logs, metrics, and traces.
“Observability’s cost problem stems from treating telemetry as special-purpose data requiring specialized infrastructure,” said Sanjeev Mohan, Principal Analyst, SanjMo. “The industry is correcting this by bringing observability data into modern data platforms where it can leverage existing lakehouse economics and AI capabilities. Snowflake’s acquisition highlights a critical industry insight: the lines between data platforms and observability platforms are blurring.”
Need for Observability
Observability has become a growing challenge as companies deploy distributed applications and AI agents that generate vast volumes of data. Traditional monitoring tools often rely on sampling or short retention windows to manage cost, limiting visibility when problems arise. Snowflake said bringing Observe’s technology into its platform will allow customers to retain high-fidelity telemetry data at scale while applying analytics and AI consistently across both operational and business datasets.
Observe’s platform was built on Snowflake from its inception, a shared foundation that is expected to simplify integration. Founded in 2017, Observe focuses on correlating telemetry data using AI to detect anomalies earlier and identify root causes faster. Its AI-powered Site Reliability Engineer (SRE) product analyzes signals across logs, metrics, and traces to provide real-time insights into system behavior.
Snowflake CEO Sridhar Ramaswamy said the acquisition reflects a shift in how enterprises view reliability. As AI agents and data applications become more central to business operations, reliability is no longer just an IT metric, but a requirement tied directly to revenue and customer experience. Embedding observability into the Snowflake AI Data Cloud, he said, will enable customers to “manage enterprise-wide observability across terabytes to petabytes of telemetry with an open, scalable architecture and AI-powered troubleshooting workflows.”
Those open standard applications include Apache Iceberg and OpenTelemetry. Snowflake said this approach allows enterprises to use object storage and elastic compute to handle telemetry data more economically, while avoiding the lock-in and cost structures associated with specialized observability infrastructure.
Larger Market Trends
The acquisition highlights broader consolidation trends across the data and observability markets. As AI adoption accelerates, vendors are increasingly positioning themselves as end-to-end platforms rather than point solution providers. Snowflake has been particularly active on this front, completing several AI-related acquisitions over the past year to strengthen its data governance, metadata management, and infrastructure capabilities.
Market reaction to the announcement was cautious. Snowflake shares fell modestly following the news, suggesting investor concern about integration execution or near-term financial impact. Still, analysts note that the long-term opportunity is significant, with the global IT operations management software market now exceeding $50 billion.
If completed, the Observe acquisition would further blur the lines between data platforms and observability tools. For Snowflake, it’s a strategic investment in providing enterprises operational telemetry and business data live, side by side, analyzed through the same AI-driven lens as organizations push AI systems deeper into production.
