Analysis
Snowflake shares jumped as much as 22-25% in premarket trading Thursday after the data-cloud company beat Wall Street's estimates across the board for its fiscal second quarter, CNBC reported. The company posted adjusted earnings of 62 cents a share on revenue of $1.55 billion, versus consensus estimates of 45 cents and $1.48 billion, with total revenue up 35% year over year.
Snowflake also raised its full-year product-revenue forecast to $6.07 billion, implying 36% growth for the year -- an unusually confident guide raise from a company that spent much of the last two years fending off questions about decelerating core-warehousing demand.
Snowflake went public in September 2020 in the largest software IPO in history at the time, building its business on separating storage from compute for cloud data warehousing, and has spent the last two years retooling around AI as customers shifted spend toward model training and inference workloads that live closer to their data. That pivot is now showing up in the numbers: CoCo, Snowflake's AI coding agent, grew to 9,100 accounts in the quarter, up more than 2,000 from the prior quarter, while CoWork, its AI workspace product, expanded to 5,800 accounts. Snowflake said AI products drove roughly half of the quarter's growth acceleration -- the clearest evidence yet that its post-IPO AI bet is converting into paying usage rather than pilot programs.
“Databricks closed a $5 billion round in August at a valuation roughly 1.6x Snowflake's own market cap heading into Thursday's move.”
The Databricks Gap
Snowflake's public quarter lands against a private rival that keeps out-growing it. Databricks closed a $5 billion round in August at a valuation roughly 1.6x Snowflake's own market cap heading into Thursday's move.
The two companies' revenue bases, though, are converging fast: Databricks is near a $6.9 billion annualized run-rate against Snowflake's roughly $5.6 billion, with Databricks growing near 80% year over year versus Snowflake's 27-29% guided product growth. Snowflake's Cortex AI gateway push was aimed squarely at closing that growth gap by giving enterprises a single layer to run models against warehouse data without exporting it -- Thursday's print is the first hard evidence the strategy is working on the income statement, not just the roadmap.
At least 22 brokerages raised price targets on the print, according to Reuters, with Wells Fargo setting a Street-high $525 target. A 22-25% single-session move ranks among the largest in Snowflake's public history and, if it holds through the open, would be its fourth-largest jump since the 2020 listing -- unusual magnitude for a company with a five-year trading history and heavy analyst coverage, where surprises of this size are rare.
For growth investors, the read-through is that public markets are now willing to pay up for AI-native product lines inside an established SaaS platform, not just for pure-play AI labs -- a data point every late-stage data-infrastructure startup pitching an AI attach layer will cite in its next deck. It also raises the bar for Databricks' eventual IPO: if Snowflake can post 35% growth and expand its multiple on AI attach, Databricks will need to show its AI products aren't just driving top-line growth but genuine margin expansion to justify a valuation still nearly double Snowflake's market cap on comparable revenue.
The bear case is straightforward. Snowflake's core product growth guide of 27-29% is still roughly half Databricks' pace, and 2,000 net-new CoCo seats in one quarter is a modest base to extrapolate a full re-rating from. Premarket moves also overstate conviction: they trade on thin volume, and Snowflake's stock has round-tripped sharp earnings pops before once the broader market digests guidance. Investors betting on a durable re-rating are underwriting continued AI-seat growth at this pace for several more quarters, not just one strong print.
The next test comes when Databricks files its own numbers as it inches toward a long-delayed IPO -- if its growth premium over Snowflake compresses even as its valuation gap stays near 2x, that's the signal the market is pricing AI hype ahead of AI revenue, not the reverse.
