Databricks to acquire Neon for AI-driven serverless Postgres

Databricks has announced its intent to acquire Neon, a serverless Postgres company, in a move aimed at enhancing capabilities around AI-driven databases and developer workloads.

Databricks plans to continue investing in Neon's database technology and will maintain support for existing and new Neon customers and partners. The acquisition reflects Databricks' commitment to addressing changes in the estimated USD $100 billion database market, which is experiencing significant disruption due to increasing adoption of artificial intelligence.

Neon has built its platform to specifically support the requirements of AI agents and agentic workflows. Internal telemetry from Neon found that over 80% of the databases provisioned on its platform were made automatically by AI agents, rather than by humans. This demonstrates what the company describes as rapid growth in agentic database workloads.

The company highlighted three fundamental differences between these machine-driven workloads and traditional, human-driven database usage patterns. The first is speed and flexibility. Neon can provision a fully isolated Postgres instance in 500 milliseconds or less, and it supports real-time branching and forking of database schema and data, enabling experiments without affecting production environments.

The second key difference is cost proportionality. Neon's architecture separates compute from storage, allowing organisations to keep the total cost of ownership low, especially for applications requiring thousands of ephemeral databases, as costs are directly proportional to actual query workloads performed.

The third aspect is that agents benefit from the open source ecosystem surrounding Postgres. Neon is fully compatible with Postgres and works out-of-the-box with common extensions.

Ali Ghodsi, Co-Founder and Chief Executive Officer at Databricks, commented: "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."

Databricks and Neon plan to address limitations inherent in traditional databases, particularly the need for compute and storage to scale together. Combining Neon's serverless Postgres with the Databricks Data Intelligence Platform is designed to help developers and enterprise teams efficiently build and deploy AI agent systems, avoiding performance bottlenecks that can arise from large numbers of concurrent agents. This approach aims to simplify infrastructure, reduce operational costs and enable swift adaptation of AI agent capabilities, while maintaining Databricks' focus on security, governance and scalability.

Nikita Shamgunov, Chief Executive Officer of Neon, stated: "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. 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."

Following the completion of the transaction, Neon's team is expected to join Databricks. Both companies indicated their intention for this integration to allow organisations to simplify data architecture, eliminate data silos and create AI agents that are more reliable, responsive and secure.

The proposed acquisition is subject to customary closing conditions, such as regulatory clearances. Neon was established in 2021 by database engineers and contributors to Postgres and is focused on providing serverless Postgres solutions for a range of users, from individuals to enterprises. Databricks, headquartered in San Francisco, provides the Data Intelligence Platform to more than 10,000 organisations globally and was founded by the creators of technologies including Apache Spark and Delta Lake.