Perplexity AI, backed by Amazon.com Inc. founder Jeff Bezos, secured $500 million in funding led by Institutional Venture Partners, tripling its valuation to $9 billion, reported the Financial Times on Wednesday, citing sources.

What Happened: The San Francisco-based startup has seen rapid growth in 2024, processing hundreds of millions of monthly queries from 15 million active users, mostly in the U.S. The company's market share in AI search increased from 2.7% to 5.8% this year, according to FirstPageSage data.

Perplexity challenges Alphabet Inc.'s (NASDAQ:GOOGL) (NASDAQ:GOOG) Google and Microsoft Corp.'s (NASDAQ:MSFT) artificial intelligence-powered search offerings, while also taking on OpenAI.

While OpenAI's ChatGPT maintains market leadership with a 73.8% share, followed by Google's Gemini at 13.5%, Perplexity's growth trajectory has attracted high-profile investors.

OpenAI's website continues to lead the AI platform race, ranking 92nd globally and 139th in U.S. web traffic, according to recent Similarweb data. The company attracted 250.1 million total visits, showcasing its commanding market position.

Perplexity.ai, while trailing in overall rankings at 467th globally and 547th in the U.S., demonstrated strong user engagement. The platform recorded 58.69 million total visits, with users spending an average of six minutes per session and viewing nearly four pages per visit.

In contrast, Google's Gemini platform struggled to gain traction, ranking 12,612th globally and 31,018th in the U.S. The service recorded just 989,992 total visits, with notably high bounce rates suggesting challenges in user retention.

Monthly visit data further highlights the disparity, with OpenAI recording 83.39 million visits compared to Perplexity.ai's 19.56 million and Gemini's 329,997 visits. While OpenAI leads in raw traffic numbers,

Perplexity AI did not immediately respond to Benzinga's request for comment.

Similarweb data also shows conversations about Perplexity versus ChatGPT surging over the course of the year, largely taking off in August.

Why It Matters: Previous backers of Perplexity include NVIDIA Corp., SoftBank's Vision Fund 2, and notable AI experts like Meta Platforms Inc.'s chief AI scientist Yann LeCun.

The funding comes as competition intensifies in the AI search space. OpenAI recently integrated web searching into ChatGPT, while Anthropic's Claude expanded its capabilities with a "computer use" feature.

Both Google and Microsoft have incorporated large language models into their search products to provide more conversational results.

Perplexity's revenue model relies on subscriptions, with annualized revenues growing from $5 million in January to $35 million in August. The company is now exploring advertising partnerships with major brands, potentially challenging the traditional search advertising system pioneered by Google.

• Apple Reportedly In Talks With Tencent, TikTok-Parent ByteDance To Roll Out AI Features In China

Image Via Shutterstock

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.