Databricks to Acquire Neon in USD 1 Billion Deal to Power AI Agent Workflows with Serverless Postgres Recent acquisitions by Databricks include Tabular and MosaicML, reflecting its aggressive expansion into the AI and data infrastructure market

Data and AI company Databricks has announced its intent to acquire Neon, a cloud-based serverless Postgres platform, in a deal reportedly worth around USD 1 billion. The move is expected to strengthen Databricks' position in building infrastructure for AI-native applications and agent-based workloads.

Neon, founded in 2021 by Nikita Shamgunov, Heikki Linnakangas and Stas Kelvich, offers a managed, open-source Postgres service optimised for cloud and AI use cases. The platform allows developers to clone databases, test changes in isolated environments, and restore data from any point in time. Neon's architecture also automatically scales compute, memory, and storage, providing a pay-as-you-go structure that aligns with the demands of ephemeral, AI-generated databases.

Recent usage data shared by the companies shows that over 80 per cent of databases provisioned on Neon were created by AI agents, not humans. This reflects a significant shift in how applications are built and deployed in the AI era, where agents require fast, flexible infrastructure to operate at machine speed.

Ali Ghodsi, Co-founder and CEO at Databricks, said, "The era of AI-native, agent-driven applications is reshaping what a database must do. 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 can keep up with agentic speed, pay-as-you-go economics and the openness of the Postgres community."

Neon's architecture is expected to complement Databricks' existing Data Intelligence Platform by allowing developers to spin up isolated Postgres instances in under 500 milliseconds. It also supports branching and forking at both the schema and data level, allowing experimentation without impacting production environments.

With this integration, Databricks aims to overcome traditional database limitations that tie compute and storage together — a constraint seen as incompatible with the elastic needs of AI agents. By decoupling these components, the companies believe they can offer lower latency, reduced cost, and simplified infrastructure management for organisations building AI systems at scale.

"Four years ago, we set out to build the best Postgres for the cloud that was serverless, highly scalable, and open to everyone. With this acquisition, we plan to accelerate that mission with the support and resources of an AI giant," said Nikita Shamgunov, CEO of Neon. "Databricks was founded by open source pioneers committed to making it easier for developers to work with data and AI at any scale. Together, we are starting a new chapter on an even more ambitious journey."

Once the acquisition is finalised — pending regulatory approvals and other standard closing conditions — Neon's team is expected to join Databricks, continuing work on their database platform and engaging with their developer community. The companies plan to share more information at the upcoming Data + AI Summit in San Francisco, scheduled for June 9–12.

Neon has raised USD 129.5 million from investors including Microsoft's M12, Menlo Ventures, General Catalyst, and Notable Capital. Databricks, meanwhile, has raised over usd 19 billion in funding to date, including a USD 15.3 billion round earlier this year that brought its valuation to USD 62 billion. Recent acquisitions by Databricks include Tabular and MosaicML, reflecting its aggressive expansion into the AI and data infrastructure market.