Snowflake Stock Soars After AI Demand Fuels Stronger Revenue Outlook

Snowflake shares surged more than 24% in pre-market trading Thursday after the cloud data company boosted its annual revenue forecast, citing strong demand for its artificial intelligence products that is accelerating growth.

AI Drives Upgraded Forecast

Snowflake lifted its fiscal 2027 product revenue forecast on Wednesday to $6.07 billion, up from a previous projection of $5.84 billion. The revised outlook followed a second quarter in which product revenue jumped 37%, with CEO Sridhar Ramaswamy stating that the company's AI offerings accounted for "approximately half of the acceleration" in that growth.

The results suggest the industry-wide boom in AI spending is translating into tangible demand for Snowflake's core platform. The company reported significant traction for its new AI tools:

• Cortex Code: The coding assistant added over 2,000 customers in the quarter, bringing its total to more than 9,100 accounts.
• CoWork: The enterprise chatbot expanded its user base to 5,800 accounts.

"AI continues to compound our advantages, creating a flywheel effect across the business," Ramaswamy said in a statement.

Market Reaction and Valuation

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If the pre-market gains hold, the stock is on track for its largest single-day percentage increase since May. The rally adds to an already strong year for the company, which had seen its shares rise 39% through Wednesday's close, significantly outperforming the S&P 500's 12% gain.

The strong performance supports Snowflake's premium valuation. The stock trades at approximately 15 times forward revenue, more than double the 7.4 times multiple for the iShares Expanded Tech-Software Sector ETF. Its forward price-to-earnings ratio of 121.8 is also well above peers like Datadog (72.7) and MongoDB (52.1).

Analyst Sentiment Turns More Bullish

Wall Street analysts responded favorably to the report, with at least 22 brokerages raising their price targets on the stock, according to data compiled by LSEG. Wells Fargo issued the highest target on the Street at $525 per share.

Analysts at Barclays noted that while there was "some nervousness around whether investor expectations were getting too high into the print," they now "can see the positive sentiment gains continuing." Jefferies analysts added that Snowflake's position as a leading enterprise data cloud provider, with AI helping to drive new workloads and expand its user base, supports its premium valuation.