May 27 (Reuters) - Snowflake raised annual product revenue forecast on Wednesday, as enterprises ramped up spending on AI applications and shifted more data workloads to its cloud platform, sending its shares surging 36% in extended trading.
The company also signed a five-year deal worth $6 billion with Amazon Web Services to use AWS' Graviton processors and AI infrastructure, as their partnership deepens around enterprise AI.
The latest deal will include deeper product integrations around generative and agentic AI, expanded go-to-market efforts through AWS Marketplace and workload migrations aimed at helping businesses move from experimenting with AI projects to using them routinely.
"The new deal with Amazon adds another element to the growth path for Snowflake," said Gil Luria, managing director of D.A. Davidson.
"It allows Snowflake to take an even bigger role in their customers transition to AI and aligns them even more with their biggest partner."
Snowflake has benefited from surging enterprise demand for its core data warehousing products, with migrations from legacy systems and increased use of machine learning tools adding momentum. It has seen strong adoption of its tools such as Cortex Code and Snowpark.
The company raised its product revenue forecast for fiscal 2027 to $5.84 billion, from $5.66 billion projected earlier.
"Based on a combination of strength in our core data platform business and meaningful uplift from AI capabilities... we are increasing our FY27 outlook," CEO Sridhar Ramaswamy said on a post-earnings call.
Snowflake expects second-quarter product revenue to be between $1.415 billion and $1.420 billion, compared with analysts' average estimate of $1.37 billion, according to data compiled by LSEG.
Its first-quarter revenue came in at $1.39 billion, above the estimate of $1.32 billion.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Shilpi Majumdar)
