Snowflake beat expectations for its fiscal second quarter and raised its outlook for the year. This result is helping the stock gain attention as a winner in the growing AI market.
Snowflake helps businesses store and analyze data. Its stock often swings sharply after earnings reports, and high investor expectations made Wednesday’s results especially important.
Shares jumped 24% in premarket trading on Thursday. The stock had already risen sharply in 2026 before the report, with much of that increase happening in one session earlier this year after a strong first-quarter result. Earlier, shares had lost over half their value as investors worried that more companies using AI agents might hurt demand for platforms like Snowflake. Instead, the opposite seems to be happening.
The company gained 692 net new customers in the quarter, a 32% increase from a year ago. Many of these customers are moving their data to Snowflake and using its AI tools to run their own AI agents.
Snowflake reported adjusted earnings of 62 cents per share, up from 35 cents a year ago and well above the 45-cent estimate from FactSet. Revenue grew 35% year over year to $1.55 billion, beating Wall Street’s forecast and growing faster than last quarter, despite predictions of a slowdown.
The company’s outlook for the rest of the year is also strong. Snowflake now expects product revenue of $6.1 billion for fiscal 2027, which would be 36% growth from the previous year, up from its earlier forecast of 31%. The company also raised its adjusted operating margin target to 14.5%, compared to 10% in fiscal 2026 and above its previous goal of 13.5%.
Snowflake is still not profitable by standard accounting measures, primarily due to high stock-based compensation costs this quarter.
The company still faces more competition from Microsoft, Databricks, and the growing abilities of AI models. KeyBanc Capital Markets says data warehousing customers are showing greater interest in data warehousing language models to manage their Snowflake costs, but these efforts are just beginning. Ramaswamy sees this trend as a chance to help customers use the platform more efficiently, which he says is key to Snowflake’s long-term success. The platform already includes tools to help users avoid extra spending.
Snowflake shares now trade at about 15 times their projected revenue for the next 12 months. This is similar to the stock’s long-term average, but it is more than twice the valuation of the wider technology software sector.
