Snowflake surges 36% for best day ever on AI frenzy, fueling software rally
Snowflake's stock surged 36% following strong fiscal second-quarter results, alleviating concerns about the impact of AI on software services. The company reported a higher-than-expected operating margin and significant customer growth, which positively influenced other software stocks. Analysts view this as a pivotal moment for Snowflake's AI monetization strategy, further supported by its acquisition of AI startup Natoma.
- ▪Snowflake expects a 12.5% fiscal second-quarter adjusted operating margin on $1.415 billion to $1.420 billion in product revenue.
- ▪The company added 616 net new customers in the quarter, reflecting 38% year-over-year growth.
- ▪Snowflake's results boosted other software stocks, with ServiceNow and Palantir seeing significant gains.
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Snowflake expects a 12.5% fiscal second-quarter adjusted operating margin on $1.415 billion to $1.420 billion in product revenue. Analysts surveyed by StreetAccount anticipated a 11.9% margin, with $1.37 billion in product revenue.Snowflake's results helped alleviate fears that new AI tools will replace software as a service, leading to what many are calling a "SaaSpocalypse." The worries sparked a massive selloff across the sector this year, which also spilled into cybersecurity.The results boosted some popular software stocks. ServiceNow added 6% and Palantir jumped more than 8%, while Oracle also added more than 6%. Microsoft, Palo Alto Networks and Atlassian gained at least 3% each.
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