(CTN News) – On Wednesday, Snowflake (NYSE: SNOW) announced that its quarterly product revenue is expected to exceed estimates, thanks to the growing adoption of artificial intelligence that has increased demand for its data cloud offerings.
As a result, the Bozeman, Montana-based company’s shares surged by almost 7% in after-hours trading.
The rise in cloud-related software spending has been driven by the desire of more companies to benefit from the AI-linked rally in the technology sector over the past year.
According to data from LSEG, Snowflake anticipates that its product revenue for the fourth quarter will be between $716 million and $721 million, which is higher than the average estimate of $700.3 million by analysts.
In 2024, it is projected that there will be a 20.4% increase in global spending by end-users on public cloud services, as reported by research firm Gartner.
Recently, the company introduced the Snowflake Cortex service, which aims to assist businesses in constructing extensive language models that serve as the fundamental basis for generative AI.
During the third quarter, the company based in Bozeman, Montana experienced a 32% growth in revenue, reaching $734.2 million, surpassing the estimated $713.1 million.
The revenue generated from product sales, which includes the utilization of computing, storage, and data transfer resources by customers on the company’s platform as an integrated package, exceeded expectations at $698.5 million for the quarter ending on October 31.
When excluding certain factors, the profit per share for the third quarter was 25 cents, surpassing the average estimate of 16 cents by analysts.