Snowflake shares surge as AI boom fuels demand for data platforms

By Akash Sriram

Aug 28 (Reuters) - Snowflake SNOW.N shares jumped about 14% on Thursday riding a wave of demand for its artificial intelligence database products, as companies race to modernize their data infrastructure and simplify AI adoption.

The stock move is set to add more than $11 billion to its $67 billion market capitalization, if premarket gains hold.

The cloud-based data warehousing firm, which enables enterprises to store, manage and analyze massive datasets across multiple cloud providers, said demand for its platform is accelerating.

"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.

Snowflake expects annual product revenue of $4.40 billion, up from its prior forecast of $4.33 billion and above analysts' estimates.

Investor optimism was further fueled by Nvidia's NVDA.O upbeat forecast, which reinforced confidence in the AI boom and signaled continued spending on data infrastructure, a trend that positions Snowflake to benefit as businesses deploy AI at scale.

Snowflake is a key beneficiary of the AI and cloud migration trend, with its modern data architecture helping companies leverage AI innovation, alongside other next-generation databases and platforms, said Richard Clode, portfolio manager at Janus Henderson Investors, which owns Snowflake shares.

Databricks said earlier this month it was raising funds in a Series K round at a valuation above $100 billion, highlighting investor demand for AI‑native data platforms and intensifying the competitive backdrop for Snowflake.

Snowflake shares, up about 30% this year, trade at 142.5 times profit estimates, compared with 75.8 for MongoDB MDB.O and 63.7 for Datadog DDOG.O.

At least 24 analysts raised their price targets and more than 10 upgraded the stock, which carries an average "buy" rating and a median target of $260.