Snowflake Raises Its Revenue Outlook as AI Demand Builds

Snowflake shares surged in extended trading after the cloud-data software company delivered stronger-than-expected product revenue and increased its annual forecast. The company now expects approximately $6.07 billion in product revenue for the fiscal year ending in January, above its previous guidance and well ahead of the $5.86 billion average analyst estimate.

The importance of the upgrade extends beyond the headline number. Product revenue represents roughly 95% of Snowflake’s overall sales, making the forecast a closely watched indicator of demand for its core cloud data platform.

For the quarter ended in July, product revenue rose 37% from a year earlier to $1.49 billion, surpassing Wall Street’s $1.42 billion consensus estimate. The results reinforce investor expectations that corporate spending on cloud-based data infrastructure remains resilient as businesses increasingly integrate artificial intelligence into their operations.

CoCo Adoption Gives Investors Another AI Growth Signal

Artificial intelligence is becoming increasingly central to Snowflake’s strategy, and the company highlighted rapid adoption of its CoCo coding assistant as evidence that customers are embracing its expanding AI capabilities.

More than 2,000 customer accounts began using CoCo during the quarter, bringing total adoption to approximately 9,100 accounts. The acceleration suggests Snowflake is attempting to turn its large installed customer base into a distribution advantage for new AI-related products.

That opportunity could become increasingly important as enterprises seek to build AI applications while maintaining access to governed corporate data. Snowflake’s platform is positioned around organizing and analyzing data in the cloud, giving the company an opportunity to connect AI workloads with information businesses already store and manage.

Investors have consequently begun placing greater emphasis on whether AI-driven consumption can produce durable increases in customer activity and revenue. The challenge is proving that early adoption translates into sustained spending rather than simply generating temporary enthusiasm around new tools.

Snowflake Faces a Powerful Challenge From Databricks

Despite the upbeat outlook, Snowflake is operating in an increasingly competitive market. Databricks, widely viewed as its principal rival, recently completed a funding round that valued the company at approximately $190 billion and reported a revenue run-rate exceeding $7 billion.

Databricks also said its revenue run-rate grew more than 80% year over year in the second quarter, highlighting the intensity of competition for enterprise data and AI spending. Snowflake therefore needs to demonstrate that its own AI offerings can generate meaningful incremental consumption while protecting its position in the broader cloud-data market.

Remaining performance obligations, a measure of contracted business, reached $9 billion during Snowflake’s latest quarter, below the $9.37 billion analyst average estimate. That figure provides an important counterpoint to the stronger revenue performance and suggests investors will continue scrutinizing forward demand.

With shares already up 39% in 2026 before the latest after-hours jump, expectations are elevated. The next phase of Snowflake’s stock performance will likely depend on whether CoCo and other AI products can sustain consumption growth, expand customer spending and differentiate the company against Databricks. If that happens, the latest rally could represent more than an earnings reaction; it could signal a broader reassessment of Snowflake’s role in the AI infrastructure market.