By Connor Hart
Shares of Snowflake saw their largest percentage increase on record after the cloud data storage company posted better-than-expected product revenues and forged a new generative artificial-intelligence partnership.
The stock rose more than 30% Thursday. Despite the intraday gains, shares remain down 15% year to date.
Snowflake after the bell on Wednesday reported third-quarter revenue of $942.1 million, up 28% from last year and ahead of the $899.3 million that analysts surveyed by FactSet had expected. Product revenue jumped to $900.3 million from $848.5 million.
This beat could be attributed more to a continued swell in demand rather than evidence that Snowflake's new products are taking off, UBS analysts say in a research note. Strong demand is expected to continue, as the company also guided for fourth-quarter revenue ahead of analyst forecasts.
"This print and outlook should quiet concerns about rising competition and bolster confidence in the 'long cloud infra' thesis," the analysts write.
Emerging products, though, are on their way.
Snowflake is making moves in the AI space, partnering with Anthropic to integrate the company's Claude AI models into its platforms, per a Wednesday announcement. Chief Executive Sridhar Ramaswamy said on a call with analysts that the deal will give businesses the ability to build AI applications using the model of their choice with the ease, built-in security and governance of the Snowflake platform.
New products, which aren't expected to contribute to revenue in the coming quarters, will become a more material contributor to the company's fiscal 2026, Wedbush analysts say in a research note.
"We continue to see that the 'optimization' phase has ended," they write.
This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).
(END) Dow Jones Newswires
November 21, 2024 12:00 ET (17:00 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
