Shares of Snowflake climbed sharply on Thursday, 28 May, after the data analytics firm raised its annual product revenue forecast and announced a five-year AI infrastructure deal worth $6 billion with Amazon Web Services (AWS).
The stock opened the session with a massive gap-up at $237 per share compared to the previous close of $175.26. The momentum further strengthened during the session, with the stock hitting a four-month high of $240 apiece, marking a 38% jump from Wednesday’s closing level.
If the gains sustain through the close, today’s rally would mark the stock’s biggest single-day surge in five years.
Along with its Q1 results, Snowflake also announced an additional $6 billion commitment to Amazon Web Services over the next five years. The agreement includes the use of Amazon’s general-purpose Graviton processor chips, which compete with Intel Corp.’s offerings.
The company said the $6 billion commitment reflects the “accelerating enterprise demand for AI and data workloads running on AWS.” By anchoring future workloads to Amazon’s custom silicon and next-generation infrastructure, Snowflake expects to secure deep volume discounts strategically designed to protect and expand long-term gross margins.
“With AWS, we are making it easier for enterprises to bring AI directly to governed data, so they can move faster, operate with greater clarity, and create measurable impact at scale,” Snowflake CEO Sridhar Ramaswamy said in a press release.
Snowflake’s earnings and the strong investor response come at a time when the software sector has been under pressure from the rapid rise of AI-focused companies over the past year. Analysts believe the AWS partnership announcement may have played a bigger role in driving the stock higher than the quarterly earnings themselves.
For the fiscal first quarter ended 30 April, Snowflake reported a 34% rise in product revenue to $1.33 billion, ahead of analysts’ average estimate of $1.27 billion. Remaining performance obligations, a key measure of bookings, stood at $9.21 billion, slightly below analysts’ expectations of $9.43 billion.
For the second quarter, the company guided product revenue in the range of $1.415 billion to $1.420 billion, representing growth of around 30%. Snowflake also raised its full-year FY27 product revenue guidance to $5.84 billion and lifted its non-GAAP operating margin guidance to 13.5%.
The updated outlook compares with its earlier forecast of $5.66 billion issued in February and came ahead of analysts’ average estimate of $5.68 billion. Product revenue contributes nearly 95% of Snowflake’s total revenue.
The company said it raised its full-year guidance due to “strong momentum” across its core platform and AI businesses.
Shares recover 76% in May
Today’s rally has expanded the stock’s month-to-date gains to 76%, bringing much-needed relief to shareholders after the stock had closed lower in each of the previous six months.
During that losing streak, the stock had declined nearly 50%, but it has now recovered all of those losses in May alone, highlighting the sharp turnaround in investor sentiment. From its yearly low of $118.30, the stock has rebounded 103%, based on today’s intraday high.
(With inputs from Bloomberg and agencies)
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
