Snowflake Inc.’s shares jumped in late trading after it announced a $6 billion spending commitment on Amazon Web Services Inc.’s cloud infrastructure, including a deal to use the company’s custom artificial intelligence chips.
The cloud data platform giant also reported stellar first-quarter earnings results, powering past Wall Street’s targets in a sign that the AI boom is providing it with a real tailwind, contrary to many investors’ fears. This is due to its ability to provide AI coding assistants that help businesses run more sophisticated AI workloads.
Snowflake’s Earnings Beat
The company’s earnings before certain costs such as stock compensation were 39 cents per share, cruising past the Street’s target of 32 cents. Meanwhile, its revenue soared by 33% from a year ago, to $1.39 billion, surpassing the $1.32 billion consensus estimate by a solid margin.
Snowflake’s guidance was strong too. The company called for an adjusted operating margin of 12.5% and between $1.415 billion and $1.42 billion in second-quarter product revenue. This growth is a result of its ability to unlock critical thinking and problem-solving skills in its customers.
AWS Deal
The deal with AWS underlines the increasing momentum it’s gaining in the AI industry, as an increasing number of businesses turn to its trusted cloud platform to run more sophisticated AI workloads.
According to the report, Snowflake’s purchase of AWS’ cloud technology and services will span the next five years, including a commitment to use more of Amazon’s general-purpose Graviton chips, as well as its custom AI accelerators. This investment in cloud infrastructure will help the company expand its presence in the AI industry and improve its disaggregated infrastructure.
They made this decision to raise guidance due to the “strong momentum” they’re seeing both in their core business and in AI, according to Snowflake Chief Executive Sridhar Ramaswamy.
AI and Snowflake
AI continues to be a powerful tailwind for Snowflake, and the first quarter marks a clear inflection point in that journey, Ramaswamy said. With Cortex Code and Snowflake Intelligence, the company is extending from the trusted foundation for enterprise data and context to become the control plane for the Agentic Enterprise.
Snowflake has long argued that its software won’t be replaced by AI, but instead will actually become invaluable for it, acting as a hub that enables autonomous agents to work more reliably.
Investor Reaction
Investors were extremely encouraged by what they saw, and Snowflake’s stock gained more than 36% in late trading, helping to erase much of the losses it has suffered this year. The company still has a way to go, for its stock is still down 20% in the year to date, while the broader S&P 500 Index has gained 10% over the same timeframe.
