Snowflake shares surge more than 20% after AI-driven revenue beat and raised outlook

Snowflake shares surged more than 20 percent in after-hours and premarket trading this week after the cloud data company reported quarterly revenue and profit well above Wall Street's estimates and raised its full-year forecast for the second time this year, the latest sign that enterprise spending on artificial intelligence infrastructure is still accelerating even as investors have grown warier of AI-linked stocks elsewhere in the market.

The company disclosed the results for its fiscal second quarter, which ended July 31, in a filing with the Securities and Exchange Commission, released after the close of trading Wednesday as the company had scheduled in advance. Product revenue, the company's core sales metric that strips out one-time professional-services fees, climbed 37 percent from a year earlier to $1.49 billion, according to the earnings release filed with regulators. Total revenue reached $1.55 billion, ahead of the roughly $1.48 billion analysts had penciled in.

The numbers

Snowflake's net loss narrowed to $191.7 million, or 55 cents a share on a GAAP basis, from $297.9 million a year earlier. On an adjusted basis, which excludes stock compensation and other one-time items, the company earned 62 cents a share, comfortably ahead of the 45-cent consensus estimate compiled by analysts. Non-GAAP operating margin expanded to roughly 15 percent of revenue, up from prior-year levels, prompting the company to lift its full-year operating-margin target to 14.5 percent from 13.5 percent.

Remaining performance obligations, a measure of contracted future business that investors watch closely as a signal of demand still to be booked as revenue, rose 30 percent to $9.0 billion. The company ended the quarter with 828 customers each generating more than $1 million in trailing 12-month product revenue, up 27 percent from a year earlier, and added 692 net new customers overall, a 32 percent increase. Net revenue retention — a gauge of how much existing customers are spending compared with the prior year — stood at 126 percent.

Looking ahead, Snowflake guided to product revenue of about $1.59 billion for the fiscal third quarter, implying growth of 37 to 38 percent, and raised its full-year product revenue forecast to $6.07 billion, up from a prior target of $5.84 billion and representing 36 percent growth for the year. Adjusted free cash flow margin is now expected to reach 23 percent for the fiscal year.

How Snowflake got here

Snowflake went public in 2020 in what was then the largest software initial public offering in history, built around a business of letting companies store and query large volumes of data in the cloud without managing their own servers. The stock cooled considerably over the following several years as investors questioned how a data-warehousing company would fare against a wave of artificial intelligence tools that threatened to commoditize the underlying infrastructure, and as rival Databricks expanded aggressively into the same market from the opposite direction, moving from machine-learning tools toward traditional data warehousing.

Under chief executive Sridhar Ramaswamy, a former Google advertising executive who took over in February 2024 after Snowflake acquired his AI search startup Neeva, the company has pushed to reposition itself as infrastructure for what it calls the "agentic enterprise" — selling tools that let businesses build AI agents directly on top of the data they already store in Snowflake, rather than exporting it elsewhere. That strategy has centered on two products: Cortex Code, an AI coding agent rebranded this year as CoCo, and Snowflake Intelligence, a natural-language interface that lets non-technical employees query corporate data. The company expanded both products earlier this year, adding features such as multi-agent orchestration and desktop and integrated-development-environment extensions aimed at enterprise developers.

Executives said on Wednesday's call that CoCo now has roughly 9,100 active accounts, an increase of more than 2,000 during the quarter alone, and that AI-related products accounted for roughly half of the quarter's revenue acceleration. The results follow a broader run of strength for Snowflake shares in 2026, which had already climbed by roughly 47 percent for the year heading into the report, as investors bet that companies would keep paying for data infrastructure to support AI workloads even as spending tightened elsewhere in enterprise software.

Who is affected

The reaction rippled beyond Snowflake itself. Ahead of the results, several Wall Street firms had already lifted their price targets on the stock, including Cantor Fitzgerald, Citigroup, Jefferies and TD Cowen, betting that consumption trends — the metric that determines how much customers actually pay to run workloads on Snowflake's platform — remained solid through the summer. The scale of the beat and the size of the guidance raise reset those expectations further; the stock's advance pushed shares to their highest levels since Snowflake's early years as a public company, a shift closely watched by rival data-platform vendors, cloud providers whose infrastructure underpins Snowflake's business, and the software sector more broadly, which has been under pressure from questions about whether AI spending is translating into durable revenue rather than one-time pilot projects.

Enterprise customers running analytics and AI workloads on the platform are also affected more directly. The growth in $1-million-plus accounts and in remaining performance obligations suggests that large customers are not only staying but expanding their commitments, a trend Snowflake has pointed to as evidence that AI features are driving incremental consumption rather than merely retaining existing workloads that might otherwise have moved to cheaper alternatives.

Reaction

Sridhar Ramaswamy struck an upbeat tone in the earnings statement accompanying the filing.

"Snowflake delivered another strong quarter, with product revenue of $1.49 billion, up 37% year-over-year, as Snowflake continues to power the enterprise AI revolution," Ramaswamy said.

The market's response was immediate. Shares jumped in after-hours trading Wednesday and extended those gains into Thursday's premarket session, with the stock's single-session move ranking among the largest in the company's history as a public company, according to trading data cited by financial news outlets. Coverage of the results noted that the combination of a clear earnings beat, a meaningful guidance increase and tangible evidence of AI monetization drove the rally, while highlights from the earnings call emphasized management's framing of AI as compounding the company's advantages across a broadening base of customers.

What happens next

Investors will now watch whether Snowflake can sustain the acceleration into the fiscal third quarter, whose results are due in early December, as the company works to convert AI product adoption into durable, recurring consumption rather than a temporary boost tied to enterprise experimentation. Analysts are likely to focus in particular on whether net revenue retention, which has been on a gradual decline for several years as Snowflake's customer base has matured, can stabilize as CoCo and Snowflake Intelligence usage scales. The results also add to a mixed picture for AI-linked technology stocks heading into the fall, coming in the same week that other software and semiconductor companies reporting quarterly results delivered more uneven outcomes, underscoring how selective investors have become about which companies are actually converting AI enthusiasm into measurable revenue growth.