Shares of Snowflake surged 4.5% on Thursday following the release of better-than-expected fourth-quarter earnings and an expanded focus on artificial intelligence initiatives. The data analytics company reported adjusted earnings of 30 cents per share on $987 million in revenue, surpassing expectations of 17 cents per share and $956 million in revenue. This represented a 27% year-over-year revenue growth.
AI Expansion and Microsoft Partnership
In a bid to enhance its AI capabilities, Snowflake announced a deeper partnership with Microsoft Azure to provide access to OpenAI models. The move aligns with the company’s broader strategy of integrating advanced AI tools as competition intensifies in the industry.
CEO Sridhar Ramaswamy reaffirmed Snowflake’s vision, calling it the “most consequential data and AI company” in the market. Snowflake has been making aggressive strides in AI, highlighted by its multiyear partnership with Anthropic and a recent undisclosed acquisition of AI startup Datavolo.
Revenue Growth and Future Guidance
Product revenue reached $943 million, exceeding the $914 million consensus estimate, marking a 28% increase. Snowflake provided full-year revenue guidance of $4.28 billion, slightly ahead of the expected $4.21 billion.
However, forecasts for the current quarter were less optimistic. The company projected product revenue between $955 million and $961 million, which was near or slightly below analyst projections of $961 million.
Market Outlook and Analyst Sentiment
Despite cautious short-term guidance, analysts remain bullish on Snowflake’s AI-driven expansion. Goldman Sachs analyst Kash Rangan noted that the company’s AI and data analytics advancements could drive long-term revenue gains. More than 4,000 customers are already utilizing Snowflake’s AI/ML services, demonstrating strong demand.
Snowflake also reported a customer base of 11,159, exceeding analyst expectations of 10,987. The company’s Chief Financial Officer Michael Scarpelli announced plans to step down but will stay on until a successor is named.
