Snowflake just posted one of its best quarters ever. And the market took notice.
The data cloud company delivered a blockbuster first quarter for fiscal 2027 on May 27, topping expectations on revenue growth, margins, and customer additions.
Snowflake (SNOW) stock jumped 38% in pre-market trading as investors processed a string of good news, including a massive new cloud infrastructure deal.
But the real story is not just one big contract. It is what is driving Snowflake’s acceleration across the board.
Why Snowflake is winning the AI data race
For years, Snowflake has built its reputation as the go-to platform for storing and analyzing corporate data in the cloud.
That foundation is now paying off in a big way as companies rush to build artificial intelligence applications.
The reason is simple. AI needs data, and Snowflake sits on top of some of the most valuable data in the enterprise world.
“AI is compounding Snowflake’s advantage in data,” CEO Sridhar Ramaswamy said plainly on the earnings call.
The company added 616 net new customers in Q1, up 38% year over year. That is the most net new customer additions in the company’s history.
- Snowflake now serves 13,912 customers, and 64 of them spend more than $10 million annually, up from the prior quarter.
- Large deals are accelerating, too. One of the largest U.S. banks completed a massive, years-long migration from Teradata to Snowflake.
- Consumer giant Nestle is building enterprise data products used by more than 50,000 employees across 150 global operations.
The $6 billion AWS deal is key
The headline number from the quarter is Snowflake’s new five-year, $6 billion contract with AWS. That is more than double its previous AWS agreement, signed in fiscal 2023.
AWS has agreed to expanded go-to-market investment and collaboration, meaning both companies will actively sell together.
Snowflake also surpassed $7 billion in lifetime AWS Marketplace sales, a milestone that underscores just how deeply intertwined the two companies are.
The financial results backing all of this up were hard to deny.
- Product revenue hit $1.334 billion in Q1, up 34% year over year. That beat the company’s prior growth rate of 30% last quarter and 26% a year ago.
- Net revenue retention, a closely watched metric that tracks how much existing customers grow their spending, climbed to 126%. That means existing customers are spending 26% more than they did 12 months ago.
- Margins improved, too. Non-GAAP operating margin expanded by more than 300 basis points YoY to 12%, despite the company investing heavily in AI products and hiring.
CFO Brian Robins was clear that the raised guidance reflects real, observed behavior. “There’s been no change in guidance philosophy,” he said.
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The rapid adoption of Cortex Code, Snowflake’s AI-powered coding tool that only reached general availability in February, accelerated the company’s core business and drove the increase in product revenue guidance.
Remaining performance obligations, a forward-looking indicator of contracted future revenue, grew 38% YoY.
That compares favorably to 34% in the same period last year, suggesting the pipeline is getting stronger, not weaker.
Snowflake’s AI products are moving the needle
Snowflake Intelligence and Cortex Code, nicknamed CoCo, are the two AI products at the center of the company’s growth story.
One is built for business users asking questions in plain English. The other is for developers building applications, data pipelines, and automated workflows.
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Together, they are driving a flywheel effect. When customers use CoCo to build faster, they consume more of the underlying Snowflake platform.
That means more revenue from both the AI products and the core business.
Accounts using Snowflake Intelligence more than doubled quarter over quarter. CoCo already has more than 7,100 accounts actively using it, just months after launch.
The company also announced its planned acquisition of Natoma, a startup that lets users take action across everyday business apps such as email, Slack, and Jira without ever leaving Snowflake’s environment.
With full-year guidance now set at $5.84 billion and margins moving in the right direction, Snowflake is making a credible case that AI is a key growth engine.
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