Snowflake surged roughly 37% on Thursday in what is on track to be the cloud-data company's best single-session gain ever, sparking a broad reversal in software stocks that had spent much of the spring trading on fears that generative AI would disrupt the enterprise-tech stack. The move dragged the S&P 500 0.59% higher and lifted the Nasdaq Composite 0.82% to a fresh all-time high, while the Russell 2000 added 0.70%. The Dow Jones Industrial Average drifted 0.05% lower as cyclical components, including a 1.94% drop in 3M and a 1.70% decline in Caterpillar, capped the blue-chip index.
The catalyst was a blowout quarterly report from Snowflake. Product revenue reached $1.33 billion in the first quarter of fiscal 2027, up 34% year-over-year, while total revenue of $1.39 billion rose 33%. Chief executive Sridhar Ramaswamy described the print as "the strongest sequential dollar growth in our history," language that analysts read as evidence the company's AI monetization strategy is hitting an inflection point rather than stalling at the door.
Software Sector Reverses on the Print
The read-through was immediate. Oracle climbed more than 6%, ServiceNow and Palantir each jumped more than 5%, and Microsoft, Palo Alto Networks and Atlassian gained at least 3% apiece. Salesforce was a notable laggard, breaking from the cohort. The reversal eased weeks of concern that hyperscaler-built AI agents would compress seat-based software pricing and erode the data-platform layer.
Snowflake's customer cohort metrics carried much of the bull case. The company now counts 779 customers spending more than $1 million on a trailing-twelve-month basis, up 29% year-over-year, with 813 Forbes Global 2000 customers on the platform. Net revenue retention came in at 126%, and remaining performance obligations grew 38% year-over-year to $9.21 billion — a forward-revenue signal that gave analysts cover to raise estimates into the back half of the year.
Guidance Resets the Software Narrative
Management guided second-quarter fiscal 2027 product revenue to $1.415 billion to $1.420 billion, representing roughly 30% year-over-year growth, and lifted full-year product-revenue guidance to $5.84 billion, or about 31% growth. For a software stock that has been treated as a referendum on whether AI will replace or expand the enterprise data layer, the guide effectively settled the argument in favor of expansion.
Macro Backdrop: PCE and an Iran Extension
The rally unfolded against a softer-than-feared inflation print. The Commerce Department's April personal consumption expenditures index rose 0.4% on the month, with the headline year-over-year rate at 3.8%, matching the Dow Jones consensus on the annual figure and coming in a tick below on the monthly read. While 3.8% remains well above the Federal Reserve's 2% target and continues to complicate the rate-cut path, the in-line print kept Treasury yields contained and allowed long-duration software names to extend gains.
Geopolitics also leaned constructive. Washington and Tehran agreed to a 60-day memorandum extending the recent ceasefire and gradually restoring energy exports from the Persian Gulf, a development that pulled crude lower and removed one of the tail risks that had been weighing on risk appetite through May.
For software bulls, Thursday's tape was the strongest signal in months that the AI build-out is still additive to incumbent platforms rather than cannibalizing them. With Snowflake's print sitting alongside contained inflation and a tentative Iran detente, the path of least resistance for software, at least in the near term, has tilted higher.
Sources: CNBC, TheStreet, Investing.com, Snowflake Investor Relations