September 3, 2026, (Inside AI) — Snowflake shares jumped over 24% in premarket trading after the cloud data company raised its annual product revenue forecast to $6.07 billion from $5.84 billion. The news signals that its AI products are now driving core platform growth, not just adding a side business.
Second-quarter product revenue climbed 37%, and CEO Sridhar Ramaswamy said AI offerings accounted for roughly half of that acceleration. The results challenge the narrative that software firms are vulnerable to AI disruption. Instead, Snowflake is turning AI into a demand engine for its data cloud.
Investors had worried expectations were too high before the report. Barclays analysts wrote that positive sentiment gains can continue. The stock had already risen 39% this year through Wednesday, versus a 12% gain for the S&P 500. If premarket gains hold, it would be Snowflake's biggest daily jump since May.
Snowflake's coding assistant, Cortex Code, now has over 9,100 accounts after adding more than 2,000 customers during the quarter. Its enterprise chatbot, CoWork, expanded to 5,800 accounts. These numbers show AI features are pulling users deeper into the platform.
AI Flywheel Replaces Disruption Fear
For years, analysts warned that generative AI could make traditional data platforms obsolete. Snowflake's results flip that concern. The company's AI tools are increasing data consumption and attracting new workloads. That creates a cycle where more data leads to better AI, which attracts more customers.
Ramaswamy described the dynamic directly.
"AI continues to compound our advantages, creating a flywheel effect across the business," Ramaswamy said.
Jefferies analysts said Snowflake's premium valuation is supported by its position as a leading enterprise data cloud provider. AI is driving new workloads, expanding the user base, and boosting platform consumption. That is a significant shift from the earlier fear that AI would commoditize data warehousing.
Snowflake's valuation remains rich. Shares trade at roughly 15 times forward revenue, compared with 7.4 times for the broader iShares Expanded Tech-Software Sector ETF. The stock is priced at 121.8 times forward earnings, well above Datadog's 72.7 times and MongoDB's 52.1 times. Investors are paying for AI-driven growth that is now showing up in the numbers.
Brokerages Race to Raise Targets
At least 22 brokerages raised their price objectives after the results. Wells Fargo issued a Street-high target of $525, according to data compiled by LSEG. The rapid repricing suggests analysts had underestimated how quickly Snowflake's AI products would contribute to revenue.
The company's AI strategy centers on making its data cloud the default place to build and run AI applications. Cortex Code helps developers write queries and code. CoWork lets business users ask questions in natural language. Both tools increase usage of Snowflake's core compute and storage services.
Snowflake's fiscal 2027 product revenue forecast of $6.07 billion implies continued strong growth. The company is now positioned as a direct beneficiary of enterprise AI spending, not a casualty of it. That narrative shift is what drove the stock surge.
The broader tech spending boom has favored hardware and model providers so far. Snowflake's results show software companies can capture AI value too, especially those that own the data layer where AI models need to operate. The next test will be whether Snowflake can sustain this growth without sacrificing margins.
