Perplexity AI, a private AI startup that competes with major players like Google (GOOGL) and Microsoft-backed OpenAI (MSFT), is reportedly close to raising $500 million at a $14 billion valuation, according to The Wall Street Journal. The funding round is being led by venture capital firm Accel, which is based in Palo Alto. This amount is at the lower end of what Perplexity had hoped to raise earlier this year, when it was seeking between $500 million and $1 billion at an $18 billion post-money valuation, as previously reported by CNBC.
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Nevertheless, Perplexity has grown quickly. Indeed, its valuation rose from $3 billion in June 2024 to $9 billion by December. The company now brings in just under $100 million in annual recurring revenue, according to a source who spoke to CNBC in March. Perplexity is also investing heavily in its upcoming AI-powered web browser, Comet, as it looks to stay competitive in the growing AI search space.
However, it won’t be easy for Perplexity as competition is heating up. In fact, Anthropic recently launched a web search feature for its Claude chatbot, and OpenAI added a search function to ChatGPT last fall. Google also introduced AI Overviews in its search engine, although the tool drew criticism for a series of high-profile mistakes. Still, as more tech giants push into AI search, Perplexity will look to carve out its own place in the market.
Which AI Stock Is the Better Buy?
Turning to Wall Street, out of the two stocks mentioned above, analysts think that GOOGL stock has more room to run than MSFT. In fact, GOOGL’s price target of $197.69 per share implies almost 25% upside versus MSFT’s 9.8%.
