Databricks acquires Neon for $1B to power AI agents with serverless Postgres

Databricks has announced its acquisition of Neon, a serverless Postgres startup, in a deal valued at approximately $1 billion. The move signals Databricks’ continued push into artificial intelligence infrastructure and highlights the increasing role of AI agents in enterprise software development.

The acquisition marks Databricks’ third billion-dollar deal in recent years, following previous buys of MosaicML and Tabular. Founded in 2021, Neon developed a cloud-native, open-source Postgres platform that supports rapid database creation, elastic scaling, and data branching—all features that have gained popularity among developers and, increasingly, AI systems.

Neon’s technology has become particularly relevant as AI agents take on more responsibilities in coding and operational tasks. Databricks reports that more than 80% of Neon databases are now generated automatically by AI agents rather than by human developers. This shift reflects a broader trend in which machine-driven software development is scaling rapidly and placing new demands on database infrastructure.

By integrating Neon, Databricks aims to provide a foundational platform for AI agents and developers to deploy serverless Postgres databases quickly and at scale. The company says Neon’s architecture—which separates storage and compute—makes it well-suited for an AI-native environment where instances must be spun up instantly and frequently in response to dynamic workloads.

Neon’s client list includes major names such as OpenAI, Adobe, Replit, Vercel, and Boston Consulting Group. Its platform, designed for modern software development, is built atop PostgreSQL, a relational database originally developed in the 1980s. While competitors like AWS, Microsoft, and Google offer their own Postgres-based services, Neon’s open-source and developer-first approach has attracted a growing user base, with over 18,000 customers to date.

Databricks CEO Ali Ghodsi emphasized that the acquisition directly addresses a growing enterprise need: enabling AI agents to interact with proprietary data securely and efficiently. As companies look to operationalize AI, they require infrastructure that can keep pace with the speed and autonomy of machine-generated tasks. Neon’s instant provisioning and forking capabilities offer an answer to that problem.

While Neon will continue to operate as a standalone entity in the near term, Databricks plans to integrate its technology into its broader platform over time. The full integration will enable Databricks’ customers to build and deploy AI agents that can seamlessly create, manage, and interact with databases at scale, without manual setup or provisioning delays.

The deal is expected to close in Databricks’ second fiscal quarter, which ends July 31. With this acquisition, Databricks positions itself alongside tech heavyweights such as OpenAI and Nvidia in the competitive AI agent ecosystem, aiming to provide core infrastructure rather than just surface-level AI tools.