Snowsflake Shares Surge 24% As AI Demand Powers Growth

Snowflake is suddenly looking like one of the biggest beneficiaries of the enterprise artificial intelligence boom.

Shares of the cloud data platform provider surged more than 20% in extended trading Wednesday and jumped about 24% before the market opened Thursday after Snowflake delivered stronger-than-expected quarterly results and raised its full-year revenue outlook.

The reaction came as investors saw evidence that growing demand for artificial intelligence is not only creating new business for Snowflake but also accelerating growth across its core data platform.

Snowflake reported $1.55 billion in revenue for its fiscal second quarter, up 35% from a year earlier and above Wall Street's average estimate of about $1.48 billion, according to LSEG data cited by Reuters.

Product revenue, which represents the company's core consumption-based business, reached $1.49 billion, rising 37% year over year.

The company also reported adjusted earnings of 62 cents per share, comfortably beating analysts' expectations of 45 cents.

The numbers were enough to trigger a sharp rally in Snowflake's stock, which had already gained substantially during 2026. Reuters reported that the shares were up about 39% for the year through Wednesday's close.

AI is becoming a major growth engine

The most closely watched part of Snowflake's results was its artificial intelligence business.

CEO Sridhar Ramaswamy said AI products were responsible for approximately half of the recent acceleration in the company's growth, highlighting a shift in how customers are using Snowflake's platform.

Two products in particular are gaining traction.

Snowflake's coding assistant, CoCo, surpassed 9,100 accounts after adding more than 2,000 accounts during the quarter. Its enterprise AI assistant CoWork expanded to 5,800 accounts.

Snowflake said the growing adoption of these tools is generating additional users, workloads and consumption across its platform.

The company's results also show that the AI story is not occurring in isolation. Snowflake added 692 net new customers during the quarter, a 32% increase from a year earlier, including 14 new Forbes Global 2000 customers.

Snowflake raises its full-year forecast

The biggest signal for investors may be what Snowflake expects next.

The company raised its fiscal 2027 product revenue forecast to $6.07 billion from its previous projection of $5.84 billion.

That represents expected annual product-revenue growth of 36%, up from the previous guidance of 31%.

For the third quarter, Snowflake expects product revenue between $1.588 billion and $1.593 billion, representing growth of approximately 37% to 38% year over year.

Snowflake also increased its full-year non-GAAP operating-margin forecast to 14.5%, compared with its previous guidance of 13.5%.

That combination — accelerating growth and improving operating margins — was particularly important for investors because it suggests the company may be expanding its AI business without sacrificing operating efficiency.

A $9 billion backlog adds another layer

Snowflake's remaining performance obligations, a measure of contracted business that has yet to be recognized as revenue, reached $9 billion at the end of the quarter.

That was up 30% year over year.

The company also reported a net revenue retention rate of 126%, indicating that existing customers continued to expand their spending on the platform. It now has 828 customers generating more than $1 million in trailing 12-month product revenue.

These figures provide investors with another reason to believe the latest acceleration could extend beyond a single quarter.

AWS partnership strengthens the AI push

Snowflake's AI expansion is also being supported by its infrastructure strategy.

Earlier this year, the company entered into a five-year, $6 billion agreement with Amazon Web Services covering access to AWS infrastructure and Graviton processors.

The partnership is significant because AI workloads require enormous amounts of computing power, while Snowflake's business depends heavily on cloud infrastructure.

Reuters reported that the AWS agreement followed a period of intense demand for AI computing capacity and helped strengthen investor confidence in Snowflake's ability to support the next stage of AI adoption.

But AI growth comes with a catch

There is still a potential challenge hiding inside Snowflake's strong numbers.

AI workloads can be more resource-intensive and carry lower margins than some traditional workloads.

Snowflake's latest guidance puts non-GAAP product gross margin at 74% for fiscal 2027. The company specifically noted that the forecast reflects a higher mix of fast-growing AI workloads, which carry lower contribution margins.

At the same time, Snowflake expects its non-GAAP operating margin to improve to 14.5%.

That means investors will be watching closely to see whether rapid AI adoption can continue translating into profitable growth.

The bigger question for Snowflake

Snowflake's latest results arrive as investors continue debating whether the enormous spending surrounding AI will eventually translate into sustainable software revenue and profits.

For Snowflake, the early evidence is encouraging.

Its core cloud data business is growing, AI products are attracting thousands of accounts, customer additions remain strong and management has raised its growth forecast.

The company is effectively betting that enterprises cannot build serious AI systems without first organizing, securing and accessing the massive amounts of data those systems require.

That puts Snowflake directly in the middle of the competition for enterprise AI infrastructure, alongside major cloud and data-platform players.

For now, Wall Street appears convinced that the strategy is working.

But the next test may be even more important: whether Snowflake can turn today's explosive AI adoption into durable growth — without allowing the cost of running those AI workloads to erode the profitability investors are increasingly demanding.

And with Snowflake now forecasting $6.07 billion in fiscal 2027 product revenue, expectations have suddenly become much higher.

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