Snowflake Inc. (SNOW  ) announced plans to acquire Observe on Thursday, aiming to embed AI-powered observability into its AI Data Cloud and expand its footprint in IT operations management. The deal follows earlier reports that Snowflake had been in advanced talks to buy Observe for about $1 billion, highlighting the growing strategic importance of observability to its AI ambitions.

Snowflake said it will integrate Observe's platform into its core stack, enabling enterprises to ingest, store, and analyze full-fidelity telemetry data at lower cost.

Although financial terms were not disclosed, prior reports suggested the transaction could approach $1 billion, potentially making it one of Snowflake's largest acquisitions.

The move targets a fast-growing IT operations management market and supports a shift from alert-based monitoring to automated troubleshooting by combining Observe's AI Site Reliability Engineer with Snowflake's data infrastructure.

The unified platform will rely on open standards such as Apache Iceberg and OpenTelemetry, allowing Snowflake to handle massive telemetry volumes from modern AI agents and production-scale applications while improving operational visibility.

Snowflake CEO Sridhar Ramaswamy said, "As our customers build increasingly complex AI agents and data applications, reliability is no longer just an IT metric - it's a business imperative."

Observe CEO Jeremy Burton said the combination delivers "faster insights, greater reliability, and dramatically better economics."

Snowflake held cash and cash equivalents of $1.94 billion as of Oct. 31, 2025.

In a separate announcement, Snowflake detailed how it is bringing new capabilities to Cortex AI by integrating Google's (GOOG  ) (GOOGL  ) Gemini models for business use cases; details are in enterprise ready AI coverage.

SNOW Price Action: Snowflake shares were down 2.36% at $227.99 at the time of publication on Thursday, according to Benzinga Pro data.