Shares shifted dramatically after Snowflake reported first-quarter results that crushed expectations and sent the stock soaring 36% in a single day — its best session ever. The rally came after Snowflake announced plans to spend $6 billion on compute from Amazon and topped earnings estimates on artificial intelligence momentum. The move raises a sharp question for investors: does a quarter of accelerating growth justify a premium valuation for a company still losing hundreds of millions on a GAAP basis?
Revenue Growth Re-Accelerated When Wall Street Feared the Opposite. Total revenue hit $1.39 billion, up 33% year over year, while product revenue — the core measure of customer spending on Snowflake's data platform — reached $1.33 billion, growing 34%.
That product revenue growth beat the company's own guidance by 700 basis points (seven percentage points), while non-GAAP operating margin hit a record 11.9%, beating guidance by nearly three points. This matters because investors had been worried that AI tools would cannibalize traditional software spending — the so-called "SaaSpocalypse." Snowflake's results helped alleviate those fears.
Big Customers Are Spending More, and Faster. Snowflake now has 779 customers spending more than $1 million annually, with 46 crossing that threshold in Q1 alone — compared to just 26 a year ago. The net revenue retention rate — a measure of how much existing customers increase their spending — stood at 126% , meaning the average customer is spending a quarter more than the prior year. That kind of expansion is what drives durable, compounding growth.
A $6 Billion Amazon Deal Deepens the AI Infrastructure Bet. Snowflake expanded its multi-year partnership with Amazon Web Services, committing $6 billion over five years for compute and AI infrastructure. The deal locks in volume pricing but also ties Snowflake's future more tightly to a single cloud provider — a strategic risk if Amazon pushes competing products.
The Profitability Gap Remains the Elephant in the Room. Snowflake reported a GAAP net loss of $295.6 million, with total operating expenses of $1.25 billion.
Management disclosed that AI products currently carry lower gross margins than the core platform , meaning the very growth investors are cheering could pressure profitability. The company raised full-year product revenue guidance to $5.84 billion (up from $5.66 billion) and lifted its full-year non-GAAP operating margin target to 13.5%. Still, a valuation above 90 times forward adjusted earnings leaves minimal room for any stumble.