Snowflake shares surged 39 per cent premarket on Thursday after the company raised its annual revenue forecast and a US$6 billion deal with Amazon bolstered investor confidence that the data platform is emerging as a major beneficiary of the AI boom.
The five-year deal with Amazon Web Services provides Snowflake with a crucial supply of AWS’s Graviton chips at a time when compute capacity has been constrained due to a massive surge in AI usage.
It also deepens the integration of Snowflake’s data storage, processing and analytics products across AI workloads on AWS cloud, helping Snowflake capture more demand as enterprises scale AI adoption rapidly. The majority of Snowflake’s customers run on AWS.
At least 25 analysts raised their price targets on Snowflake following the announcements, putting its median price target at $275, up from $230 before the earnings report on Wednesday.
If premarket gains hold, Snowflake is set to add more than US$20 billion to its market cap of US$60.75 billion.
The massive jump in Snowflake shares, which have plunged 20 per cent this year as of last close, “tells you just how much skepticism had built up as data names were caught in the broader AI software sell-off,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
“But it also shows how quickly sentiment can turn when a company shows AI is already helping the top line, rather than simply decorating the slide deck.”
Peers Datadog and MongoDB rose 5.9 per cent and 9.6 per cent, respectively, riding Snowflake’s blowout results.
After being battered by fears that AI would disrupt enterprise software, Snowflake is now embedding the technology across its platform that lets businesses unify data from multiple sources, run analytics and build AI tools.
The company has seen strong adoption of its AI tools such as Cortex Code and Snowpark, which help businesses build generative AI applications and deploy machine learning models on their data.
The deal also comes as yet another vote of confidence for Amazon’s custom chip business, which has signed on major customers, including Anthropic, OpenAI, Facebook-parent Meta and Uber in recent months.
Analysts at Morningstar said the collaboration should strengthen Snowflake’s position as a leading data platform within the AWS ecosystem, improving its ability to defend against rivals, such as Databricks and Google BigQuery.
Snowflake currently trades at 85.21 times its estimated earnings for the next 12 months, compared with 12.73 times for Salesforce and 47.17 times for MongoDB.
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Reporting by Kanishka Ajmera, Deborah Sophia and Anhata Rooprai in Bengaluru; Editing by Vijay Kishore
