Before the bell on Thursday, Snowflake’s (SNOW.N) shares rose more than 24% as investors applauded the company’s improved annual revenue projection and indications that its AI solutions are becoming more popular.
The cloud data platform provider reported a 37% increase in second-quarter product revenue and increased its fiscal 2027 product revenue prediction from $5.84 billion to $6.07 billion on Wednesday. CEO Sridhar Ramaswamy stated that “approximately half of the acceleration” in growth was due to its AI offerings.
The findings highlight how the tech investment boom might help software companies that are typically thought to be more sensitive to AI disruption, as AI is starting to translate into genuine demand for Snowflake’s core platform rather than just creating a new product opportunity.
“AI continues to compound our advantages, creating a flywheel effect across the business,” Ramaswamy stated.
While workplace chatbot CoWork grew to 5,800 accounts, Snowflake’s coding helper Cortex Code surpassed 9,100 accounts after gaining more than 2,000 clients during the quarter.
The question of whether investor expectations were rising too high into the print caused some anxiety. Barclays analysts noted, “But we can see the positive sentiment gains continuing.”
This year, Snowflake has outpaced the overall market, rising 39% through Wednesday while the S&P 500 (.SPX) gained 12%. The stock is expected to make its largest daily increase since May if premarket gains continue.
The broader iShares Expanded Tech-Software Sector ETF is trading at 7.4 times forecast revenue, while its shares are trading at almost 15 times. Additionally, the company is priced at 121.8 times forward earnings, which is significantly higher than peers Datadog (DDOG.O), which opens new tab 72.7 times, and MongoDB (MDB.O), which opens new tab 52.1 times.
