Snowflake (NYSE: SNOW) shares rallied sharply on Friday, closing up 9.65% at $248.96, as investors cheered the company's latest earnings report and raised guidance. The stock's surge added approximately $7.6 billion in equity value, even as the broader market declined.
Strong Earnings Drive Rally
The cloud data platform reported first-quarter product revenue of $1.33 billion, a 34% increase year-over-year. Total revenue for the quarter reached $1.39 billion, up 33%. The company's remaining performance obligations (RPO) surged 38% to $9.21 billion, signaling strong future demand.
Snowflake also raised its fiscal 2027 product revenue guidance to $5.84 billion, up from its previous forecast of $5.66 billion. The company maintained its non-GAAP operating margin outlook at 13.5%.
AI Adoption Accelerates
CEO Sridhar Ramaswamy highlighted that product revenue saw its "strongest sequential dollar growth" in the company's history. CFO Brian Robins noted that "AI continues to accelerate" the company's core data platform. Snowflake reported that over 13,600 accounts are now using its AI tools, with Cortex Code active in more than 7,100 accounts.
The company did not break out AI-specific revenue, but the adoption numbers underscore the growing role of artificial intelligence in Snowflake's business model.
Amazon Web Services Deal
Snowflake's rally also reflected the impact of a significant deal with Amazon Web Services (NASDAQ: AMZN). The company announced a five-year, $6 billion agreement with AWS, which helped boost analyst sentiment. Following the earnings release and the AWS deal, at least 30 analysts raised their price targets on Snowflake stock.
The median analyst target now stands at $280, implying about 11% upside from Friday's close. Scotiabank analyst Patrick Colville categorized Snowflake as an "AI winner" after the results.
Market Context
Friday's rally stood out against a weak broader market. The Nasdaq Composite slipped 0.2% on the day and lost 4.6% for the week. The S&P 500 edged down less than 0.1% and fell 2% for the week. Snowflake's trading volume surged to 25.59 million shares, about 303% of its 65-day average, indicating strong investor interest.
Short sellers betting against AI software stocks faced a squeeze, according to analysts. Matt Britzman, senior equity analyst at Hargreaves Lansdown, noted that the rally in May showed "how quickly sentiment can turn" when AI helps drive a company's sales.
Customer Growth
Snowflake reported 779 customers generating over $1 million in product revenue over the trailing 12 months, up 29% from a year earlier. Net revenue retention stood at 126%, reflecting strong customer loyalty and expansion.
Shares remain about 11% below the $280 median analyst target set after the earnings report and AWS deal announcement. The stock had traded as low as $222.45 earlier in the session before rebounding sharply.
