Snowflake Inc (NYSE:SNOW) stock rallies 12.14% (As on May 22, 11:24:37 AM UTC-4, Source: Google Finance) after the company raised its fiscal 2026 forecast for product revenue, betting on strong demand for its data analytics services as enterprises prioritize artificial intelligence spending. The company’s shares rose after it topped first-quarter results estimates and forecast current-quarter revenue above expectations. Snowflake’s first-quarter product revenue rose about 26% to $996.8 million, ahead of estimates of 21.5% growth to $959.2 million. Remaining performance obligations totaled $6.7 billion with year-over-year growth of 34%. The net revenue retention was a very healthy 124%.

Meanwhile, the company has recently announced that its customers can now leverage many of Snowflake’s core capabilities including data sharing, security and performance optimization using Apache Iceberg, giving them even more flexibility to manage and query data at scale. Snowflake’s push to integrate artificial intelligence into its cloud through partnerships with OpenAI and Anthropic allows customers to build and run more advanced AI models to streamline large swathes of data. The company is also benefiting from higher enterprise spending as firms shift their workloads to the cloud while looking to develop AI applications. Snowflake’s AI deals with other startups have helped it cater to a larger cohort of companies looking to build AI agents through its platform.

SNOW in the first quarter of FY25 has reported the adjusted earnings per share of 24 cents, beating the analysts’ estimates for the adjusted earnings per share of 21 cents. The company had reported the adjusted revenue growth of 35.9 percent to $1.04 billion in the first quarter of FY25, beating the analysts’ estimates for revenue of $1.01 billion. Both Snowpark and Dynamic Tables outperformed expectations in Q1 with both of these accounts signed $100 million-plus contracts. The company has added 451 net new customers in Q1, growing 19% year-over-year. The non-GAAP operating margin was 9%, up 442 basis points year-over-year. The company ended the quarter with $4.9 billion in cash, cash equivalents, short-term and long-term investments.

The company forecast product revenue in the range of $1.035 billion to $1.040 billion for the current quarter, compared with estimates of $1.021 billion, according to data compiled by LSEG. It now targets fiscal 2026 product revenue of $4.325 billion, compared with its prior target of $4.28 billion. SNOW expects Q2 non-GAAP operating margin of 8%. For FY 2026, the company is increasing the revenue guidance to $4.325 billion, representing 25% year-over-year growth.