Snowflake Inc. witnessed a remarkable surge in its stock price on Thursday, climbing over 33% after the company announced a significant partnership with Amazon Web Services (AWS) and raised its long-term revenue projections. The stock closed at $233.38, up $58.12, after touching an intraday high of $243.99. This rally marks a dramatic turnaround for the stock, which had been down roughly 20% year-to-date before the announcement.
Strong Earnings and Outlook
The company reported first-quarter revenue of $1.39 billion, a 33% increase year-over-year. Product revenue, which is derived from customers' usage of compute, storage, and data-transfer services on the Snowflake platform, rose 34% to $1.33 billion. Looking ahead, Snowflake raised its fiscal 2027 product revenue outlook to $5.84 billion from $5.66 billion. Remaining performance obligations (RPO) grew 38% to $9.21 billion, signaling strong future demand.
The AWS Partnership
The five-year, $6 billion agreement with AWS is a key catalyst. Under the deal, Snowflake gains access to AWS Graviton processors and AI infrastructure, along with deeper product integration and joint sales through the AWS Marketplace. This partnership positions Snowflake as a critical player in the AI infrastructure space, addressing investor concerns about whether AI spending benefits software companies.
CEO Sridhar Ramaswamy described AI as a “powerful tailwind” for the company. CFO Brian Robins noted that Snowflake now has 779 customers spending over $1 million annually, with 46 new entrants to that tier during the quarter.
Wall Street Turns Bullish
The sentiment shift was swift. At least 30 analysts raised their price targets, pushing the median target to $280 from $230. Wedbush increased its target to $280, while William Blair analysts cited a “clear inflection for AI adoption” among Snowflake clients. Gil Luria of D.A. Davidson stated the AWS deal “adds another element” to Snowflake’s growth trajectory.
Matt Britzman of Hargreaves Lansdown noted that the move demonstrates how quickly sentiment can change when a company proves AI is generating real revenue rather than just appearing in presentations.
Market Context and Valuation
Snowflake currently trades at about 85 times estimated earnings, a premium that reflects investor confidence in its growth trajectory. Its market capitalization now stands at approximately $79.4 billion, slightly below Datadog’s $82.6 billion but well above MongoDB’s $26.3 billion. The company’s usage-based revenue model remains a key variable, as any slowdown in enterprise AI adoption could impact its outlook.
The broader software sector is increasingly divided between companies that could be disrupted by AI agents and those that provide the data backbone for AI tools. Snowflake’s strengthened AWS partnership and growing AI-related usage have firmly placed it in the latter category.
