The announcement comes a week after Twitter invested $70 million in popular music streaming service SoundCloud to push its stalled growth and amid the rumours that technology giant Google might soon acquire the company.
With a little over 300 million users, Twitter has made a few investments in the field of machine learning earlier.
"Our acquisition of Magic Pony builds on other investments we have made in machine learning, beginning with the acquisitions of image search startup Madbits in July 2014 and machine learning startup Whetlab in June 2015," Twitter CEO Jack Dorsey wrote in a blog post on Monday.
Magic Pony's team would be joining Twitter Cortex, a team of engineers, data scientists and machine learning researchers dedicated to building a product in which people can easily find new experiences to share and participate in.
Although Dorsey did not mention how much Twitter paid for acquisition, a report in technology website TechCrunch.com said Twitter will pay nearly $150 million for the company, including bonuses.
Magic Pony's technology would be "used to enhance our strength in live and video and opens up a whole lot of exciting creative possibilities for Twitter".
Dorsey said the company was continuing to build strength into deep learning teams with world-class talent to help Twitter be the best place to see what is happening and why it matters.
"We value deep learning research to help make our world better and we will keep doing our part to share our work and learnings with the community," he noted.
While Twitter is on an investment spree, media reports have hinted that Google is ahead in the race to acquire Twitter. Another key global media player Comcast may also join the race.
As the news of Microsoft's $26.2 billion acquisition of the professional networking website LinkedIn made the headlines recently, Twitter's shares went up more than eight percent in early-morning trading same day.
According to media reports, Microsoft-LinkedIn acquisition in the enterprise social media space has rekindled hope for Twitter which is affected by stalled user growth.
A Re/Code report had said that if Twitter shares stay up for some time, it is a clear signal that investors would rather see it in someone else’s hands.
The 10-year-old Twitter is facing stalled user growth and growing competition for quite some time. A sequential decline in its monthly active users (MAUs) base triggered a sharp fall for Twitter shares as the company announced its fourth quarter results recently.
The micro-blogging site reported 305 million monthly active users for the fourth quarter, compared to 307 million in the third quarter that excluded SMS-only followers.
As many top-notch executives have quit the company in the recent past, Twitter is going through a major overhaul under Dorsey.