Snowflake confirmed it will acquire observability platform Observe.

Rumors surfaced in December that the cloud vendor was looking to scoop up the Redwood City, California-headquartered firm for $1 billion. The company already shared some DNA with the firm, which was founded in 2017 by Snowflake veterans as well as talent from Splunk and data testing platform Wavefront.

Observe combines AI with site reliability engineering (SRE) for its observability services. While no financial details were revealed of the acquisition, the firm was last valued at $848 million according to Pitchbook data.

Snowflake CEO Sridhar Ramaswamy commented the deal would expand AI security in its cloud, saying: “As our customers build increasingly complex AI agents and data applications, reliability is no longer just an IT metric – it’s a business imperative. By bringing Observe’s capabilities directly into the Snowflake AI Data Cloud, we are empowering our customers to manage enterprise-wide observability across terabytes to petabytes of telemetry with an open, scalable architecture and AI-powered troubleshooting workflows.”

Jeremy Burton, CEO for Observe, added: “Observability is fundamentally a data problem … As AI reshapes how applications are built, the bottleneck has shifted from writing code to operating and troubleshooting complex systems in production. Observe was built for this moment. By combining our AI-powered SRE with Snowflake’s AI Data Cloud, we can deliver faster insights, greater reliability, and dramatically better economics. Together, we’ll help enterprises run the next generation of AI applications and agents with confidence.”

In one major observability deal rounding out 2025, Palo Alto Networks bought up Observe rival Chronosphere for around $3.35 billion. Palo Alto's purchase came after it published research suggesting almost half of AI system breaches last year involved data exfiltration through assistants or plugins, due to AI agents leaning heavily on APIs to function.

“Observability is a fundamental component of detection and response for AI agents and agentic systems,” Allie Mellen, principal analyst at Forrester, told SDxCentral. “It’s also an area that many security information and event management (SIEM) vendors support as a parallel use case. Data consolidation is very important to manage costs today, and consolidating data for observability and security in one place can save time and resources.”