Snowflake Gives Strong Sales Outlook With AI Adoption Focus

(Bloomberg) — Snowflake Inc. projected better-than-expected revenue growth for the fiscal year, sending an optimistic signal about the adoption of its recently launched products for artificial intelligence. The shares jumped in premarket trading.

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Product revenue, which makes up the bulk of Snowflake’s business, will increase about 24% to $4.28 billion in the year ending January 2026, the company said Wednesday in a statement. Analysts, on average, estimated $4.23 billion, according to data compiled by Bloomberg.

Snowflake makes software to ingest and analyze data from a variety of sources. Over the last year, Chief Executive Officer Sridhar Ramaswamy has pushed the company to introduce additional AI products and make it easier to use large language models on data stored in Snowflake’s platform. The company announced an agreement Wednesday to let customers access OpenAI’s models directly through its system, similar to an arrangement with AI startup Anthropic unveiled in November.

Snowflake shares were up about 12% in early trading on Thursday after closing at $166.19. If the move holds, it would mark the biggest intraday gain in three months. The stock, which declined 22% in 2024, had increased 7.6% this year through Wednesday’s close as investors have grown more optimistic about customer adoption of new tools like Cortex, which allow users to implement generative AI.

Fiscal fourth-quarter product revenue increased 28% to $943.3 million, compared with analysts’ average estimate of $915.8 million. Snowflake now has 580 customers that spent more than $1 million over a trailing 12-month period, compared with 542 in the previous quarter.

Remaining performance obligations — another key benchmark of growth — were $6.9 billion in the period ended Jan. 31, topping the average estimate of about $6.67 billion.

(Updates with premarket shares starting in first paragraph.)