Snowflake Inc. (NYSE: SNOW) saw its shares skyrocket 36% in U.S. premarket trading Thursday, erasing months of underperformance after the AI data cloud provider delivered a blowout fiscal 2027 first-quarter report that beat Wall Street estimates across all key metrics, raised its full-year outlook and unveiled major strategic moves. The results decisively reversed investor concerns about slowing growth that had weighed on the stock earlier this year.
The company reported adjusted earnings per share of $0.39, handily topping analyst consensus estimates of $0.32 by $0.07. Product revenue climbed 34% year-over-year to $1.33 billion, accelerating from 30% growth in the prior quarter and 26% a year earlier, and beating market expectations by 5.1%.
Profitability improved dramatically, with non-GAAP operating margin expanding more than 300 basis points year-over-year to 12%, well above the 9.2% analysts had forecast. Notably, Snowflake achieved this efficiency gain while adding just 17 organic employees during the quarter, highlighting a step-function improvement in operational discipline.
“AI continues to be a powerful tailwind for Snowflake, and Q1 marks a clear inflection point in that journey,” said Sridhar Ramaswamy, the company’s CEO.
The primary catalyst behind the stronger-than-expected performance was Cortex Code — internally nicknamed “Coco” — Snowflake’s AI coding assistant that became generally available on February 5. CFO Brian Robins confirmed Coco was “the largest driver” behind the upgraded guidance, emphasizing that management only includes measurable customer behavior in its forecasts, meaning the tool’s impact was not reflected in previous projections.
As of quarter-end, more than 7,100 customer accounts were using Coco, which is driving direct AI-related sales while boosting activity across Snowflake’s entire data cloud platform.
Buoyed by this momentum, Snowflake raised its full fiscal 2027 outlook across the board. It now expects second-quarter product revenue of $1.415 billion to $1.420 billion, implying approximately 30% year-over-year growth compared to analyst expectations of 26%. Full-year product revenue was lifted to $5.84 billion, representing 31% annual growth, up from the prior guidance of $5.66 billion. The company also raised its full-year non-GAAP operating margin target to 13.5% from 12.5%.
Snowflake announced two transformative strategic initiatives during the quarter. It signed a new five-year infrastructure agreement with Amazon Web Services valued at $6 billion, more than doubling the size of its previous arrangement to accelerate enterprise AI adoption and optimize cloud compute costs. The company also revealed plans to acquire Natoma, an enterprise MCP platform that enables AI agents to securely connect with common business applications including email, Slack and Jira within Snowflake’s governed ecosystem.
Wall Street reacted positively to the results, with major banks lifting their price targets for the stock. Morgan Stanley maintained an “overweight” rating and raised its target to $300 from $245, describing the quarter as “a blockbuster, thesis-affirming quarter” driven by authentic AI monetization rather than temporary migration-related benefits.
Bernstein kept its “market-perform” rating while increasing its target to $250 from $195, noting Snowflake “checked all the boxes” and had “decisively resolved” concerns about whether growth could reaccelerate in fiscal 2027.
Snowflake’s underlying business fundamentals continued to strengthen. Net revenue retention improved to 126% from 125% in the previous quarter. The company added 616 net new customers, a 38% year-over-year increase, bringing the total number of customers generating more than $1 million in trailing 12-month product revenue to 779. Remaining performance obligations rose 38% year-over-year to $9.21 billion.
Prior to the earnings release, Snowflake shares had fallen 20.1% year-to-date, significantly underperforming the Nasdaq Composite’s 14.8% gain. Thursday’s premarket surge positions the stock to reverse that downward trend as investors reprice its AI growth prospects.
