- Snowflake signed a definitive agreement on Jan. 8, 2026 to acquire Observe and embed its AI-powered observability into the Snowflake AI Data Cloud.
- The combined platform aims to ingest and retain full-fidelity logs, metrics, and traces using open standards like OpenTelemetry and Apache Iceberg to cut cost and improve visibility.
- Snowflake says Observe’s agentic AI SRE could help customers diagnose and resolve production issues up to 10 faster.
- Financial terms were not disclosed, but reports peg the deal near $1B, potentially Snowflake’s largest acquisition and a push into the $50B+ ITOM market.
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The acquisition of Observe marks a strategic expansion by Snowflake beyond its core strengths in data warehousing, analytics, and AI into the observability domain, traditionally the terrain of companies like Datadog, Splunk, and Dynatrace. Observe, founded in 2017 and founded on top of Snowflake’s own database infrastructure, offers an “agentic” SRE tool that correlates telemetry signals (logs, metrics, traces) and shifts diagnostics from reactive to proactive. This synergy harnesses Snowflake’s scalable data plane and aligns observability with enterprise AI reliability needs.
Snowflake is positioning itself to leverage economies of scale in telemetry ingestion and long-term retention, a pain point in IT operations. Many teams reduce retention windows or sample data due to high storage and processing costs. By integrating Observe within its AI Data Cloud and using open standards such as Apache Iceberg and OpenTelemetry, Snowflake intends to treat telemetry as first-class data—allowing richer observability, enhanced AI tooling, and more seamless operations across DevOps/Platform Engineering and data/AI teams.
The market context reinforces the importance of this move: the IT Operations Management (ITOM) market grew to $51.7 billion in 2024, up 9 % from 2023. Snowflake’s acquisition gives it access to a growing segment and builds a competitive moat, especially as many enterprises struggle with fragmented observability tooling. However, challenges lie ahead, including unifying user personas (DevOps and observability users) under Snowflake’s go-to-market, ensuring latency and performance at petabyte scale, and avoiding the pitfalls of integrating adjacent verticals where Snowflake has less experience.
Supporting Notes
- Snowflake and Observe agreement signed January 8, 2026; Observe to be integrated directly into Snowflake’s AI Data Cloud.
- Snowflake claims production issues can be resolved up to 10× faster by combining Observe’s AI SRE with Snowflake’s data foundation.
- Architecture will be built on open standards—Apache Iceberg for storage, OpenTelemetry for telemetry ingestion.
- Snowflake aims to allow retention of 100 % of telemetry data at lower cost, eliminating trade-offs between retention, visibility, and cost.
- ITOM market estimated at $50 billion+, specifically $51.7 billion in 2024 with 9 % growth.
- Observe has raised between $393 million and ~$500 million in venture funding; last valuation around $848 million in mid-2025.
- Terms of acquisition undisclosed; deal speculated to be around $1 billion, possibly Snowflake’s largest acquisition.