Snowflake Inc. beat expectations with results released after Wednesday’s market close and updated its outlook, signaling stronger-than-feared prospects for the software company amid debate about AI’s impact on the sector.
Key figures and guidance
The company said it expects product revenue to grow roughly 31 percent this year, reaching about $5.84 billion versus the prior market expectation of $5.66 billion. Product revenue accounts for approximately 95 percent of Snowflake’s total revenue.
For the quarter ended April 30, Snowflake reported product revenue of $1.33 billion, up 34 percent year‑over‑year. Its backlog stood at $9.21 billion, slightly below the average analyst expectation of $9.43 billion.
$6 billion arrangement with Amazon
Snowflake announced a $6 billion agreement with Amazon.com, Inc. covering cloud services and chip usage. The deal involves spending on Amazon Web Services (AWS) and use of Amazon’s general-purpose Graviton chips, which compete with Intel products.
Sridhar Ramaswamy, Snowflake’s chief executive officer, described the partnership as excellent and said the collaboration brings many joint business opportunities.
AI as an opportunity for Snowflake
The company reported that its AI-powered tools have matured into a standalone business. Ramaswamy said the number of customers buying the company’s AI-driven code tools doubled in a single quarter to reach 7,100.
Snowflake’s core offerings—solutions for organizing enterprise data stored in the cloud—are increasingly integrated with AI capabilities. While some investors have feared that AI might disrupt traditional software business models, Snowflake’s upbeat guidance appears to counter those concerns.
Market reaction and stock movement
In after-hours trading, Snowflake’s shares jumped nearly 40 percent. That rebound largely erased about a 20 percent decline the stock had suffered earlier this year, leaving shares trading higher than where the year began.
Why this matters
The company’s results and the sizable Amazon arrangement indicate that certain software firms can leverage demand for AI to create new revenue streams. The combination of rising product revenue, a rapidly expanding AI customer base, and a significant cloud-services agreement suggests some players in the software industry are adapting and benefiting from the transformation.
First mentions in this article: Snowflake Inc., Amazon.com, Inc., Amazon Web Services, Graviton, Intel, Sridhar Ramaswamy.
