Snowflake to Acquire Observe, Unifying Data and AI Operations

BOZEMAN, Mont. – January 08, 2026 – Snowflake (NYSE: SNOW), the AI Data Cloud company, has announced its intent to acquire Observe, a leader in AI-powered observability, in a strategic move that signals a significant convergence of data management and IT operations. The acquisition aims to embed Observe’s advanced capabilities directly into the Snowflake AI Data Cloud, creating a unified platform designed to manage the immense scale and complexity of modern AI-driven enterprise systems.

This deal is more than a simple feature integration; it represents a fundamental shift in how enterprises are expected to monitor, troubleshoot, and ensure the reliability of their increasingly complex digital infrastructure. By bringing AI-powered observability into its core platform, Snowflake is betting that the future of operational stability lies in treating telemetry data—logs, metrics, and traces—as a first-class citizen within a unified data environment.

“As our customers build increasingly complex AI agents and data applications, reliability is no longer just an IT metric – it’s a business imperative,” said Sridhar Ramaswamy, CEO of Snowflake, in the official announcement. The acquisition directly addresses this imperative, positioning Snowflake not just as a repository for business data, but as the central nervous system for operational intelligence in the AI era.

A Strategic Convergence

For years, Snowflake has been on a trajectory to evolve beyond its data warehousing roots into a comprehensive platform for the entire data lifecycle. This has included significant investments in AI and machine learning capabilities, such as its Cortex AI service and Snowpark developer framework. The acquisition of Observe is a logical and powerful extension of this strategy, bridging the gap between data analytics and the real-time operational health of the applications that generate and consume that data.

Observe's platform was built from the ground up on Snowflake, a fact that highlights the natural synergy between the two companies. This shared foundation is expected to facilitate a seamless integration, allowing the combined entity to deliver on its ambitious promises quickly. The core of Observe's technology is an AI-powered Site Reliability Engineer (SRE) that leverages a “unified context graph.” This graph correlates vast streams of telemetry data to provide a holistic view of system behavior, enabling teams to move from reactive firefighting to proactive, automated troubleshooting.

According to the companies, this AI-driven approach can help resolve production issues up to ten times faster. By unifying Observe’s platform with Snowflake’s trusted data foundation, the goal is to create a system where operational insights and business analytics can coexist and enrich one another, breaking down the traditional silos between DevOps and data teams.

Challenging the Observability Titans

Snowflake's entry into observability places it in direct competition with established giants in the lucrative IT Operations Management (ITOM) market, a sector Gartner valued at $51.7 billion in 2024. Incumbents like Datadog, Splunk, and Dynatrace have long dominated this space with powerful, albeit often expensive and proprietary, platforms.

However, the industry is grappling with a significant challenge: the explosive growth of telemetry data generated by microservices, containerized applications, and AI models has made traditional observability solutions prohibitively expensive for many organizations. Enterprises are often forced to sample data or limit retention windows to manage costs, creating blind spots that can hinder root-cause analysis during critical outages.

Snowflake and Observe aim to dismantle this economic barrier. “Observability's cost problem stems from treating telemetry as special-purpose data requiring specialized infrastructure,” noted Sanjeev Mohan, Principal Analyst at 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.”

By treating telemetry as just another data source within its AI Data Cloud, Snowflake can leverage its efficient object storage and elastic compute engine to offer full, high-fidelity data retention at a substantially lower cost. This model directly threatens the premium pricing structures of many dedicated observability vendors and offers a compelling value proposition to CIOs and CFOs under pressure to rein in cloud spending.

An Open Future for Enterprise Telemetry

The strategic foundation of this new, unified offering is its commitment to open standards, specifically Apache Iceberg and OpenTelemetry. This is a crucial differentiator in a market historically characterized by vendor lock-in. OpenTelemetry (OTel) provides a vendor-neutral standard for instrumenting applications to collect logs, metrics, and traces, allowing organizations to avoid being tied to a single vendor's proprietary agent. Apache Iceberg, an open table format for massive analytic datasets, ensures that the stored telemetry data remains in a non-proprietary format, accessible by a wide range of processing engines.

This open-standard architecture provides enterprises with greater flexibility, governance, and long-term control over their own operational data. It enables them to build a more interoperable data strategy, where telemetry data can be analyzed within Snowflake or used with other tools that support these open formats. For developers and operations teams, it simplifies instrumentation and reduces the friction of adopting new tools.

“As AI reshapes how applications are built, the bottleneck has shifted from writing code to operating and troubleshooting complex systems in production,” said Jeremy Burton, CEO of Observe. “By combining our AI-powered SRE with Snowflake’s AI Data Cloud, we can deliver faster insights, greater reliability, and dramatically better economics.”

As the acquisition moves toward closing, pending regulatory approvals, the industry will be watching closely. Snowflake is not just acquiring a tool; it is making a bold statement about the future of enterprise software, where the distinction between data platforms and operational platforms disappears, giving way to a single, intelligent, and open cloud for both business and technology.