Databricks Acquires Neon for $1 Billion to Power Next-Gen AI Workloads

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Databricks has announced its acquisition of Neon, a cloud-native database startup, in a deal valued at approximately $1 billion. The strategic move strengthens Databricks’ position in the AI-driven data infrastructure space by integrating Neon’s innovative serverless Postgres database into its own data intelligence ecosystem.

Neon, founded in 2021 by Nikita Shamgunov along with software engineers Heikki Linnakangas and Stas Kelvich, has built a fully managed, cloud-based platform that offers serverless scaling and advanced developer capabilities like database cloning, branching for isolated testing environments, and point-in-time recovery. These features are particularly aligned with the demands of AI applications, which often require dynamic, fast-scaling infrastructure.

Databricks emphasized that Neon’s technology is well-suited to AI agent workloads — automated processes that create and manage data environments faster than human developers. According to telemetry shared by the company, 80% of databases provisioned on Neon were initiated by AI agents rather than human users.

Ali Ghodsi, Databricks’ co-founder and CEO, highlighted the shift toward AI-native development. “The era of AI-native, agent-driven applications is reshaping what a database must do,” he said. “Neon proves it: four out of every five databases on their platform are spun up by code, not humans. By bringing Neon into Databricks, we’re giving developers a serverless Postgres that matches the speed of agents, with flexible economics and open-source compatibility.”

Backed by over $129 million in funding from major investors such as M12 (Microsoft’s venture arm), General Catalyst, Menlo Ventures, and Notable Capital, Neon positioned itself as a strong alternative to traditional cloud databases like AWS Aurora Postgres. Its open-source roots and developer-friendly model attracted early adoption and enthusiasm.

Databricks, which has raised more than $19 billion to date and was most recently valued at $62 billion, has been actively expanding its capabilities to support AI development. The Neon acquisition follows its earlier purchases of MosaicML ($1.3 billion) and Tabular (reportedly nearly $2 billion), as it seeks to offer a comprehensive platform for building, training, and deploying AI models and agents.

By integrating Neon’s scalable, AI-friendly database technology, Databricks is doubling down on its vision of a modern, unified platform for data and AI — one that empowers developers to innovate faster in an increasingly autonomous computing world.

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