Snowflake Shares Surge 24% on Q1 Earnings Beat and $6 Billion AI Investment
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Source: CNBC
- Earnings Beat: Snowflake's fiscal Q1 adjusted earnings per share and revenue exceeded Wall Street expectations, leading to a 35% surge in stock price, marking its best performance ever and highlighting strong momentum in the AI sector.
- Massive Investment Plan: The company announced a $6 billion investment in computing from Amazon, indicating its commitment to AI technology, which is expected to enhance its market competitiveness and product innovation capabilities.
- Significant Customer Growth: Snowflake added 616 net new customers in the quarter, reflecting a 38% year-over-year increase, with 779 customers now spending over $1 million annually, showcasing the success of its AI monetization strategy and strong market demand.
- Acquisition of AI Startup: Snowflake plans to acquire the AI startup Natoma, although financial details were not disclosed, this move is expected to further strengthen its technological capabilities and market position in the AI domain.
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Analyst Views on SNOW
Wall Street analysts forecast SNOW stock price to rise
33 Analyst Rating
30 Buy
3 Hold
0 Sell
Strong Buy
Current: 239.200
Low
237.00
Averages
278.19
High
312.00
Current: 239.200
Low
237.00
Averages
278.19
High
312.00
About SNOW
Snowflake Inc. is an artificial intelligence (AI) data cloud company. The Company provides a platform which powers the AI data cloud, enabling customers to consolidate data into a single source of truth to drive insights, apply AI to solve business problems, build data applications, and share data and data products. Its cloud-native architecture includes three independently scalable but logically integrated layers across storage, compute, and cloud services. The storage layer ingests massive amounts and varieties of structured, semi-structured, and unstructured data. The compute layer provides dedicated resources to enable users to simultaneously access common data sets for many use cases with minimal latency. The cloud services layer enables users to securely use AI within applications, tools, and processes. Its platform supports a wide range of product categories for customers’ business objectives, including analytics, data engineering, AI, applications and collaboration.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Significant Revenue Growth: Snowflake reported a 33% year-over-year revenue increase to $1.39 billion for the quarter ending April 30, demonstrating strong business growth potential in the AI-driven market.
- Expanding Customer Base: The number of customers generating over $1 million in revenue rose by 29% to 779, indicating successful sales growth among existing clients and the attraction of new business.
- Upgraded Annual Performance Forecast: Management raised its full-year product revenue forecast to $5.84 billion, reflecting a 31% growth rate, and increased the adjusted operating margin expectation to 13.5%, showcasing optimism about AI business prospects.
- AI-Driven Strategic Transformation: CEO Sridhar Ramaswamy emphasized that the success of AI tools is transforming Snowflake from a traditional data platform to the “control plane for the Agentic Enterprise,” further solidifying its market leadership position.
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- Significant Revenue Growth: Snowflake reported a 33% year-over-year revenue increase to $1.39 billion for the quarter ending April 30, demonstrating strong business growth potential in the AI-driven market.
- Expanding Customer Base: The number of customers generating over $1 million in revenue rose by 29% to 779, indicating successful sales growth among existing clients and the attraction of new business.
- Upgraded Annual Performance Forecast: Management raised its full-year product revenue forecast to $5.84 billion, reflecting a 31% growth rate, and increased the adjusted operating margin expectation to 13.5%, showcasing optimism about AI business prospects.
- AI-Driven Strategic Transformation: CEO Sridhar Ramaswamy emphasized that the success of AI tools is transforming Snowflake from a traditional data platform to the “control plane for the Agentic Enterprise,” further solidifying its market leadership position.
See More
Palantir Technologies Consolidates in Range-Bound Trading
- Technical Setup: Palantir's stock has been consolidating between $130 and $160, with market optimism suggesting a potential breakout above $160 to retest the all-time high of $207.52.
- Business Model Strength: The company's Artificial Intelligence Platform is demonstrating strong monetization capabilities by compressing the typical corporate software sales cycle from nine months to less than five days, enhancing its competitiveness among free-cash-flow-positive enterprise platforms.
- Defensive Spending Opportunity: The recent federal investment of over $2 billion under the CHIPS Act signals a unique market opportunity for Palantir, positioning it to potentially benefit from the next wave of defensive capital.
- Institutional Investor Behavior: Institutional accumulation occurs aggressively whenever the stock approaches $130, reflecting confidence in Palantir's future performance, while the $160 resistance level provides support for bearish positions.
See More
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- Significant Stock Surge: Snowflake (SNOW) was upgraded by HSBC on Friday after its stock jumped over 36% due to stronger-than-expected results and guidance, along with a deal with Amazon (AMZN), indicating strong market confidence in its future growth.
- Valuation Premium Justified: HSBC analyst Stephen Bersey noted that Snowflake's non-GAAP PE stands at 130.0x, significantly above the sector median of 24.2x, with a projected non-GAAP EPS CAGR of 49.8% for FY26-31, showcasing its earnings durability driven by AI adoption.
- Target Price Increase: The analyst raised Snowflake's target PEG from 2.0 to 2.75 and increased the next 12-month non-GAAP EPS estimate from $1.81 to $2.11, resulting in a target price hike from $176 to $289, reflecting increased confidence in its long-term growth potential.
- Rating Upgrade: HSBC upgraded Snowflake's rating from Hold to Buy based on stronger earnings momentum, improved AI monetization visibility, and greater confidence in the company's long-term growth trajectory, signaling a positive outlook for its future performance.
See More
Major Wall Street Rating Changes Overview
- Dell Upgrade: Susquehanna upgraded Dell from neutral to positive, citing increased confidence in a sustainable 8-10% operating margin and a 6% free cash flow margin, which supports a potential rerating of its EV/sales multiple to 3x, indicating strong market potential.
- Viper Energy Initiation: RBC initiated coverage of Viper Energy with an Outperform rating and a $58 price target, highlighting its advantages in scale and core Permian focus, positioning it as a best-in-class mineral and royalty company.
- SentinelOne Buy Rating: Bank of America upgraded SentinelOne from neutral to buy, viewing its solid quarterly performance as a strong entry point after an 18% decline in after-hours trading, reflecting confidence in its future growth prospects.
- XPeng Upgrade: Macquarie upgraded XPeng from neutral to outperform, noting its volume growth in the Chinese EV market, while future investments in humanoids and robotaxis provide additional upside potential for its stock.
See More
Anthropic Approaches $1 Trillion Valuation After Funding Round
- Successful Funding: Anthropic secured $65 billion in its latest funding round, bringing its valuation to $965 billion, highlighting strong investor demand for AI companies and indicating significant future market potential.
- Market Outlook: Wedbush analyst Dan Ives predicts the Nasdaq will exceed 30,000 points by 2027, reflecting optimistic sentiment towards tech stocks, especially with a wave of mega-IPOs on the horizon.
- IPO Surge: Major tech firms like SpaceX, Anthropic, and OpenAI are expected to go public in 2026, and while these companies have yet to post annual profits, the market is optimistic about their future profitability, which could lead to market volatility.
- Industry Impact: Ives asserts that Anthropic represents the best AI model globally, which will increase pressure on OpenAI and further drive the development of the AI revolution, although some analysts warn this could signal a market top.
See More
Anthropic Approaches $1 Trillion Valuation Amid Mega IPOs
- Valuation Dynamics: Anthropic secured $65 billion in its latest funding round, reaching a valuation of $965 billion, which, while still short of the $1 trillion target, reflects strong investor demand for AI companies that could drive future market growth.
- Market Outlook: Wedbush analyst Dan Ives predicts that the Nasdaq will surpass 30,000 points by 2027, marking a 'historic' period in Wall Street history, particularly with the upcoming mega-IPOs slated for 2026.
- IPO Wave: The IPOs of SpaceX, Anthropic, and OpenAI are seen as the three pillars of the fourth industrial revolution; although these companies have yet to generate annual profits, Anthropic is expected to post its first profitable quarter in its upcoming earnings report.
- Market Risk Warning: Some analysts caution that this wave of large IPOs could signal a market top, reminiscent of the late 1990s dot-com bubble, although Ives believes the current market resembles 1997 rather than 1999, indicating a lower risk of a bubble.
See More
