Snowflake Inc. saw its shares surge by 14% on Thursday, adding more than $11 billion to its market capitalisation as investor demand for AI-powered data platforms continues to accelerate. The rally highlights Snowflake’s growing role in helping businesses modernise data infrastructure and simplify artificial intelligence (AI) adoption.
AI Demand Fuels Snowflake’s Growth
Snowflake, a cloud-based data warehousing company, allows enterprises to store, manage, and analyse large datasets across multiple cloud providers. The company reported stronger-than-expected demand for its platform as businesses scale up AI-driven initiatives.
Snowflake also raised its annual product revenue forecast to $4.40 billion, up from its prior guidance of $4.33 billion and above Wall Street expectations.
Investor Optimism Backed by Nvidia’s AI Momentum
Investor confidence in Snowflake was bolstered by Nvidia’s upbeat forecast, which signalled continued spending on AI infrastructure. Analysts say that beyond chipmakers, data providers like Snowflake are emerging as key beneficiaries of AI adoption.
“Investors are increasingly searching for opportunities where AI is making a real difference. While chip providers have benefited for the past few years and cloud revenue growth is notable at companies like Microsoft, it is having a significant effect among data providers,” said Ben Barringer, global TMT analyst at Quilter Cheviot.
Competition with Databricks and Other Data Platforms
Snowflake’s rise comes amid intensifying competition in the AI-native data platform space. Rival Databricks recently announced it was raising funds at a valuation above $100 billion, underscoring investor demand in the sector.
Despite competition, analysts remain bullish on Snowflake. At least 24 analysts raised their price targets, and more than 10 upgraded the stock following the rally. The stock carries an average “Buy” rating with a median target of $260.
Snowflake Valuation and Market Performance
Snowflake shares have gained about 30% year-to-date, reflecting investor optimism around AI-driven cloud migration. The company’s stock trades at 142.5 times profit estimates, higher than competitors like MongoDB (75.8x) and Datadog (63.7x).
Portfolio manager Richard Clode of Janus Henderson Investors, which owns Snowflake shares, noted:
“Snowflake’s modern data architecture positions it as a key beneficiary of AI innovation alongside other next-generation databases and platforms.”
Key Takeaways
- Snowflake shares surged 14%, adding $11B to its market cap.
- The company raised its annual product revenue forecast to $4.40B.
- AI adoption and data infrastructure modernisation are fueling demand.
- Snowflake trades at a premium valuation compared to MongoDB and Datadog.
- Analysts remain bullish, with a median price target of $260.
