Shares of Snowflake Inc. rose nearly 30% in after-hours trading. The move came after the software developer issued a stronger-than-expected annual forecast and signed a $6 billion multiyear agreement to use Amazon.com Inc.’s cloud services and chips.
On Wednesday, Snowflake said product revenue in the fiscal year ending in January 2027 would grow by about 31% to $5.84 billion. That was above the previous forecast of $5.66 billion issued in February and also exceeded analysts’ average estimate of $5.68 billion. Product sales account for about 95% of the company’s total revenue, Bloomberg reported.
Snowflake has made a new commitment to spend an additional $6 billion on Amazon Web Services. The agreement includes the use of Amazon’s general-purpose Graviton processors, which compete with Intel Corp.’s chips. “Our teams work exceptionally well together, and we drive a lot of joint business,” Snowflake CEO Sridhar Ramaswamy said, commenting on the deal.
According to Ramaswamy, the company is seeing growing demand for its core data products, while its newer AI tools have already become “legitimate businesses in their own right.” The number of customers using the company’s AI-assisted coding tool doubled from the previous quarter to 7,100.
What Snowflake does
Snowflake develops software that helps companies organize, analyze, and store corporate data in the cloud. The company is now actively embedding artificial intelligence into its platform. At the same time, investors are increasingly concerned that the new technology could reshape the software industry’s business model as a whole.
“In the last few weeks, we’re seeing a separation between winners and losers in software,” said Gil Luria, an analyst at DA Davidson & Co. “Snowflake is winning.”
In extended trading, the company’s shares rose as high as $230 after closing the regular session at $175.26. Snowflake stock had declined by roughly 20% since the start of the year.
In the fiscal first quarter, which ended on April 30, the company’s product revenue rose 34% to $1.33 billion, beating analysts’ average estimate of $1.27 billion. Remaining performance obligations, a measure of future bookings, came in at $9.21 billion, below analysts’ average forecast of $9.43 billion.
AI hype
The market is currently seeing sustained hype around everything related to artificial intelligence. Investors are actively buying not only shares of AI model developers, but also stocks of companies that provide the technological foundation for the sector: chipmakers, cloud infrastructure providers, data center operators, networking equipment suppliers, and software platforms for data management. The market’s logic is simple: if demand for AI continues to grow, the winners will include not only developers of end products, but the entire chain of companies without which this technology cannot scale.
That is why Snowflake’s strong results are being viewed by investors as part of a broader trend. Companies are increasingly preparing data for AI adoption, moving workloads to the cloud, and looking for tools that can help them use generative models in business more quickly. Against this backdrop, any signs of rising demand for infrastructure, cloud services, and AI tools are prompting an amplified market reaction, as investors try to identify the future winners of the new technology wave in advance.
As a reminder, apart from Snowflake, Salesforce and key data releases are also currently in focus.
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