Snowflake Stock Surges 36% as AI Monetization Story Hits an Inflection Point
Snowflake Inc. (NYSE: SNOW) exploded 36% higher in premarket trading Thursday, erasing weeks of uncertainty after the data cloud company delivered a first-quarter earnings beat across every key metric and raised its full-year outlook. Wall Street wasted no time calling it a turning point.
Shares had closed Wednesday at $175.26, down 1.3%, just before results hit after the bell. By Thursday morning, the narrative had flipped entirely.
The Numbers That Moved the Market
Snowflake posted adjusted earnings per share of $0.39, clearing the $0.32 consensus by $0.07. Product revenue reached $1.33 billion, growing 34% year-over-year — an acceleration from 30% in Q4 and 26% a year ago — and topped estimates by 5.1%. Non-GAAP operating margin expanded more than 300 basis points to 12%, well ahead of the 9.2% analysts had penciled in.
“AI continues to be a powerful tailwind for Snowflake, and Q1 marks a clear inflection point in that journey,” said CEO Sridhar Ramaswamy.
Coco: The Product Behind the Beat
The real story behind the numbers is Cortex Code — Snowflake’s AI coding agent, known internally as “Coco.” The tool went generally available on February 5th, right as the quarter opened, and quickly became the company’s most consequential new product. CFO Brian Robins told analysts on the earnings call that Coco was “the largest driver” of the guidance raise, explaining that management only forecasts observed behavior, meaning the product’s impact couldn’t factor into guidance until now.
More than 7,100 accounts have already adopted the tool. Beyond generating direct AI revenue, Coco is also pulling through additional consumption on Snowflake’s core data platform — a compounding dynamic that management clearly views as the engine of future growth.
Wall Street Responds
Analysts moved quickly. Morgan Stanley, which rates the stock overweight, raised its price target to $300 from $245 and called it “a blockbuster, thesis-affirming quarter,” noting the beat reflected genuine AI monetization rather than one-off migration deals that had flattered an earlier period. Bernstein, maintaining market-perform while lifting its target to $250 from $195, said results “checked all the boxes” and that Snowflake “decisively resolved” the debate over whether growth could reaccelerate in fiscal 2027.
Guidance Raised Across the Board
Looking ahead, Snowflake guided Q2 product revenue of $1.415–$1.420 billion, implying 30% growth against a consensus of just 26%. For the full year, the company raised its product revenue outlook to $5.84 billion — 31% growth — up from prior guidance of $5.66 billion. Full-year non-GAAP operating margin guidance also moved higher, to 13.5% from 12.5%.
Strategic Moves Signal Long-Term Conviction
Beyond the earnings beat, Snowflake announced a new five-year, $6 billion infrastructure commitment to AWS — more than double its prior contract. The company also announced its intent to acquire Natoma, an enterprise MCP platform that lets AI agents securely interact with everyday business applications like email, Slack, and Jira without leaving Snowflake’s governed environment. Together, the two moves signal that Snowflake is playing offense, not just riding a favorable quarter.
Customer Metrics Strengthen the Case
The underlying customer data reinforced the headline beat. Net revenue retention improved to 126% from 125% last quarter. Snowflake added 616 net new customers, up 38% year-over-year, and now counts 779 customers with trailing 12-month product revenue exceeding $1 million. Remaining performance obligations rose 38% year-over-year to $9.21 billion — a strong indicator of durable forward demand.
For investors who waited through Snowflake’s growth deceleration, Thursday’s print offered a clear answer: the AI monetization thesis is no longer a projection. It’s showing up in the numbers.
