Snowflake raises annual product revenue forecast to $4.4b

Snowflake raised its fiscal 2026 product revenue forecast to US$4.4 billion, up from US$4.3 billion, as demand for its data analytics and AI services grows.

Shares rose 13% in after-hours trading following the announcement.

Snowflake, which provides a cloud-agnostic data platform, reported Q2 product revenue of US$1.1 billion, matching analyst estimates.

CEO Sridhar Ramaswamy said Microsoft’s Azure showed the fastest growth among supported clouds, with a 40% rise year-on-year, especially boosting Snowflake’s business in Europe, the Middle East, and Africa.

Remaining performance obligations, a key indicator of future revenue, reached US$6.9 billion, up 33% from last year.

Snowflake serves enterprises looking to manage and analyze data across different cloud providers as companies increase AI spending.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Enterprise AI spending shifts from experimental to permanent budget lines

Snowflake’s revenue forecast increase reflects a broader transformation in how enterprises approach AI investments.

A recent survey of 100 CIOs reveals that generative AI budgets are expected to grow by approximately 75% over the next year, with companies moving away from experimental spending to permanent budget allocations1.

This shift explains Snowflake’s confidence in raising its forecast, as two-thirds of enterprise teams now plan to allocate between $50 million and $250 million specifically to generative AI initiatives2.

The transition from pilot programs to production-ready AI applications creates sustained demand for data infrastructure platforms like Snowflake’s cloud-agnostic system.

By the end of 2024, over 70% of large enterprises are expected to have at least one generative AI initiative in production, indicating that AI spending has evolved beyond temporary experimentation into core business strategy2.

2️⃣ Cloud data warehouse market growth supports sustained demand trajectory

Snowflake’s forecast revision aligns with explosive growth projections for the entire cloud data warehouse sector.