Snowflake's "Perfect Scorecard": AI Cloud Engine Drives Growth; Shares Jump After Hours

TradingKey - Cloud data warehouse giant Snowflake (SNOW.US) posted impressive second-quarter earnings on August 27, with core financial metrics showing strong performance and an upwardly revised full-year revenue guidance — both exceeding market expectations. Robust growth in its AI data cloud business served as the key driver.

Fueled by this positive news, Snowflake shares surged over 13% in after-hours trading.

Source: Google Finance

The earnings report revealed that Snowflake's Q2 total revenue reached $1.144 billion, a significant 32% increase year-over-year. Product revenue — the core income source primarily from customer consumption of compute, storage, and data bandwidth — amounted to $1.09 billion, also achieving 32% year-over-year growth. This product revenue figure substantially exceeded Wall Street analysts' consensus forecast of $1.04 billion.

Additionally, Snowflake provided an optimistic outlook for the full fiscal year ending January 2026. The company expects full-year product revenue to reach approximately $4.4 billion, representing a year-over-year growth rate of about 27%. This guidance also surpasses analysts' average expectation of $4.34 billion.

This strong performance and positive forward-looking guidance effectively alleviated market concerns about potential pressure on traditional software vendors from macroeconomic slowdown and competition from emerging AI companies.

Evercore ISI analyst Kirk Materne said in a note that this is a promising development, because Snowflake traditionally tends to be quite conservative in its guidance. “We believe that the strong results and upped full-year guidance demonstrate that the company continues to see steady demand in its core data warehouse business and feels confident in the durability of demand heading into the third quarter.”

Snowflake is increasingly becoming the preferred data platform for numerous enterprises building and adopting artificial intelligence applications, as it effectively simplifies complex AI technology stacks.

Snowflake CFO Mike Scarpelli stated that new customer growth increased by 21% this quarter. "It's clear that our new customer acquisition strategy is yielding positive results."

The company specifically highlighted that it has 654 strategic customers who generated over $1 million in product revenue over the past 12 months. Snowflake CEO Sridhar Ramaswamy stated the company is operating well: "Tens of thousands of customers trust their business to Snowflake, with more than 6,000 tapping into its AI capabilities."

Despite its strong performance, Snowflake faces a highly competitive environment. Its most notable competitor, Databricks, recently completed a major funding round valuing the company at $100 billion. In comparison, Snowflake's current market capitalization stands at approximately $65 billion.