Snowflake shares closed 36 per cent higher on 28 May, the data-cloud company's best single day since it went public. Two things moved them. The fiscal first-quarter numbers beat Wall Street, and Snowflake committed to spend US$6 billion with Amazon Web Services over five years, including AWS's custom silicon for AI work.
The quarter
Revenue rose 34 per cent year on year to US$1.39 billion, ahead of the US$1.32 billion analysts expected. Adjusted earnings came in at US$0.39 a share against a US$0.32 forecast. Snowflake lifted full-year product-revenue guidance to US$5.84 billion, about 31 per cent growth, and widened its non-GAAP operating margin by three points to 12 per cent.
Why the AWS deal mattered to the market
A US$6 billion outlay would normally read as a cost. Investors took it as a demand signal. Snowflake is buying that much compute, much of it on Amazon's own chips, because its customers are running AI workloads on Snowflake's data, and it needs the capacity to serve them. Finance chief Brian Robins told analysts that AI tools such as the company's Cortex Code product were driving what he called a step-change in AI revenue, per SiliconANGLE. That is a vendor characterisation; the revenue line will show whether it holds.
The wider read
Snowflake's jump helped lift the broader software sector the same day, per CNBC. After two years in which the market punished software names for spending on AI without obvious return, a company tying a large compute commitment directly to accelerating revenue is the kind of proof point investors had been waiting for.
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