Snowflake Stock Price: Why Did The Cloud Software Firm's Shares Surge By 40%?

Snowflake's shares surged on Thursday after the cloud software company beat quarterly expectations, lifted its outlook and deepened its ties with Amazon Web Services in a deal worth $6 billion (£4.47 billion) over five years.

The move, which sent SNOW sharply higher in premarket trading, reflected a market suddenly more convinced that artificial intelligence is feeding through to real demand rather than just tidy investor rhetoric.

To recall, Snowflake had spent much of this year under pressure. The stock was down 19% heading into the results, after a weaker-than-hoped February update and renewed worries about how AI disruption might hit software vendors.

Snowflake Stock Price And The AI Turnround

The latest quarter appears to have given investors the answer they wanted on the Snowflake stock price. Revenue for the three months to 30 April rose 33.5% year-on-year to $1.39 billion (£1.04 billion), comfortably ahead of the $1.32 billion (£980 million) analysts expected, according to FactSet figures cited in the company's update.

Product revenue, the core of Snowflake's business, climbed 33.9% to $1.33 billion (£990 million), an 8.8% increase on the previous quarter and the strongest sequential dollar growth in the firm's history.

Adjusted earnings per share rose to 39 cents, up from 24 cents a year earlier and well above the 32 cents Wall Street had pencilled in. Snowflake chief executive Sridhar Ramaswamy called it a 'milestone quarter.'

The numbers were backed by visible customer behaviour. Chief financial officer Brian Robins said 46 customers now spend more than $1 million (£750,000) with Snowflake over a trailing twelve-month period, up from 26 a year earlier.

AI Deals With AWS Push Snowflake Stock Price Higher

Underpinning the surge in the Snowflake stock price was not just the beat, but the scale of the firm's bet on Amazon's cloud. Snowflake said it has committed to spend $6 billion (£4.47 billion) on Amazon Web Services infrastructure over the next five years, more than doubling a prior $2.5 billion (£1.86 billion), five-year agreement struck in 2023.

Ramaswamy framed the expansion as an AI play, not simply a volume discount. 'AI has generated enormous excitement, but for enterprises, the real challenge and opportunity is turning intelligence into action,' he said.

Partnering more deeply with AWS, he argued, will bring AI 'directly to governed data' so customers can move faster and 'create measurable impact at scale.'

Practically, the deal allows Snowflake to buy computing capacity in bulk at wholesale rates, then resell that power to its own customers at a margin. TD Cowen analyst Derrick Wood said in a note that the longer commitment helps secure better pricing, which management expects will 'offset the mix of lower gross margin business from their new AI products.'

Those AI offerings include Cortex Code, tools for running AI models and agents, and Snowflake Intelligence, a broader enterprise platform built on top of Cortex.

Analysts who had fretted over competitive pressure from Databricks and Microsoft's Fabric platform sounded notably more relaxed. Wedbush raised its price target on Snowflake to $280 from $270 (£208.65 to £201.20), maintaining an Outperform rating, and said enterprise AI demand is improving 'faster than expected.'

Raymond James analyst Adam Tindle went further, writing that Snowflake now sits in the 'AI winner camp', with a 'differentiated ability to monetise both business users and builders' by embedding AI directly into its data platform.

Guidance Lift Adds Fuel To Snowflake Stock Price Rally

If the historical numbers lit the fuse under the Snowflake stock price, the outlook helped keep it burning. For the current quarter to July, Snowflake forecast product revenue between $1.415 billion (£1.05 billion) and $1.42 billion (£1.06 billion(, ahead of the $1.374 billion (£1.02 billion) analysts had expected.

For the full fiscal year, the company lifted its product revenue guidance to $5.84 billion (£4.35 billion), implying 31% growth, up from a previous forecast of $5.66 billion (£4.22 billion), or 27% growth.

Remaining performance obligation, a measure that combines deferred revenue and contracted but unbilled work, rose 38% to $9.21 billion (£6.86 billion), roughly in line with expectations.

Wall Street's enthusiasm was not unqualified. Jefferies analyst Brent Thill cautioned that AI products carry lower gross margins than Snowflake's established platform, even as management reiterated a 75% product gross margin target for fiscal 2027, helped by efficiency gains such as lower bandwidth costs under the new AWS agreement.

There are strategic moves under way beyond AWS as well. Snowflake recently agreed to acquire Observe, an observability platform for developers and IT teams, in a deal reported at around $1 billion (£750 million), and separately announced the purchase of Natoma.

Both are designed to sit closer to how customers monitor and operate their systems, presumably feeding more data and more usage back into Snowflake's core cloud.

Snowflake's stock price surged as much as 40% in early US trading on Thursday, after the cloud software firm Snowflake posted forecast-beating first quarter results, raised its full-year outlook and unveiled a $6 billion (£4.47 billion) expansion of its partnership with Amazon Web Services tied to artificial intelligence.

The jump capped a sharp reversal in sentiment around Snowflake, which had spent six straight quarters sliding and was down 19% in 2026 ahead of the numbers.

The company, best known for its data cloud platform, had been under pressure after a muted fourth-quarter beat, leadership changes in its sales organisation and nagging doubts over whether AI would erode, rather than enhance, demand for its services.