Snowflake (NYSE:SNOW) shares surged to about 40% in after-hours trading on Wednesday after the cloud software company beat quarterly expectations, raised its annual outlook and unveiled a $6bn strategic agreement with Amazon Web Services aimed at accelerating artificial intelligence adoption.
The data cloud company reported first-quarter revenue of $1.39bn, up 33% from a year earlier, while adjusted earnings came in at 39 cents a share, ahead of Wall Street forecasts. Product revenue rose nearly 34% to $1.33bn, marking the strongest sequential dollar growth in the company’s history.
Snowflake also lifted its full-year product revenue guidance to $5.84bn from $5.66bn, betting that corporate demand for AI-powered data tools will continue to strengthen despite broader concerns over enterprise software spending.
Chief executive Sridhar Ramaswamy said the company was benefiting from a surge in demand for AI applications that can securely operate on corporate data. Snowflake announced new AI products including Cortex Code and Snowflake Intelligence, which allow businesses to build and deploy AI agents directly within its platform.
Strategic tie-up with Amazon
The standout development was Snowflake’s expanded collaboration with Amazon’s AWS, involving a $6bn commitment over five years to build out artificial intelligence (AI) infrastructure.
This investment covers computing power, storage, and networking capacity essential for running large-scale AI systems. The companies said the collaboration would deepen integration between Snowflake’s data platform and AWS AI services, helping enterprises manage and deploy generative AI applications more efficiently.
Analysts interpreted the deal as a strong vote of confidence from AWS, suggesting robust long-term demand for AI-driven data services. Snowflake is reframing its role in the tech ecosystem, presenting itself not as software vulnerable to AI disruption but as the “plumbing” powering AI applications.
The rally marked a sharp reversal for Snowflake, whose shares had struggled earlier this year amid concerns over slowing cloud growth and intensifying AI competition. Analysts said the latest results suggested Snowflake was positioning itself as a central platform for enterprise AI workloads rather than a company vulnerable to disruption.
Investigation announced
While the market celebrated the earnings beat and strategic deal, Snowflake faces scrutiny from long-term investors. An investigation has been announced into potential concerns around shareholder interests, focusing on whether management’s actions align with investor protections. The enquiry will also look into whether Snowflake adequately disclosed risks tied to growth projections and business operations.
On February 28, 2024, Snowflake Inc. released its results for the quarter ended January 31, 2024, and for the full 2024 fiscal year, warning of growing revenue pressures linked to product efficiency improvements, tiered storage pricing and expectations that some customers would adopt Iceberg Tables for storage needs.
Snowflake shares fell sharply in the months that followed, dropping from $237.72 on February 12, 2024, to a low of $107.13 by September 6, 2024.
The probe follows a lawsuit accusing Snowflake of securities law violations and is examining whether certain company directors may bear responsibility for the alleged misconduct.
