Sept 3 (Reuters) – Snowflake’s shares surged more than 24% before the bell on Thursday as investors cheered a stronger annual revenue forecast and signs that the company’s AI products are gaining traction.
The cloud data platform provider lifted its fiscal 2027 product revenue forecast on Wednesday to $6.07 billion from $5.84 billion and posted a 37% jump in second-quarter product revenue. Its AI offerings accounted for “approximately half of the acceleration” in growth, according to CEO Sridhar Ramaswamy.
The results show AI is beginning to translate into tangible demand for Snowflake’s core platform rather than simply creating a new product opportunity, underscoring how the tech spending boom can benefit software firms traditionally seen as more vulnerable to AI disruption.
“AI continues to compound our advantages, creating a flywheel effect across the business,” Ramaswamy said.
Snowflake’s coding assistant, Cortex Code, topped 9,100 accounts after adding more than 2,000 customers during the quarter, while enterprise chatbot CoWork expanded to 5,800 accounts.
“There was some nervousness around whether investor expectations were getting too high into the print. (But) we can see the positive sentiment gains continuing,” Barclays analysts wrote.
Snowflake has outperformed the broader market this year, rising 39% through Wednesday versus a 12% gain for the S&P 500. If premarket gains hold, the stock will be headed for its biggest daily jump since May.
Its shares are trading at roughly 15 times forward revenue, compared with 7.4 times for the broader iShares Expanded Tech-Software Sector ETF. The stock is also priced at 121.8 times forward earnings, well above peer Datadog’s 72.7 times and MongoDB’s 52.1 times.
Jefferies analysts said Snowflake’s premium valuation remains supported by its position as a leading enterprise data cloud provider, with AI helping drive new workloads, expanding its user base and boosting consumption on its platform.
Following its second-quarter results, at least 22 brokerages raised their price objectives, with Wells Fargo issuing a Street-high target of $525, according to data compiled by LSEG.
(Reporting by Rashika Singh and Kanishka Ajmera in Bengaluru; Editing by Jonathan Ananda)
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